How Company Files IPO
Understanding the corporate process of filing and going public through an IPO.
IPO Filing Process Steps
Step 1: Board Approval
Company board approves the decision to go public and appoints merchant bankers/investment banks.
Step 2: Pre-filing Approval
Obtain approvals from stock exchange, Registrar of Companies (RoC), and other regulators.
Step 3: DRHP Preparation
Draft Red Herring Prospectus (DRHP) prepared with detailed company information, financials, and risks.
Step 4: SEBI Filing
DRHP submitted to SEBI (Securities and Exchange Board of India) for preliminary examination.
Step 5: SEBI Comments
SEBI reviews and sends comments within 30 days. Company addresses queries and refiles.
Step 6: SEBI Approval
Once SEBI is satisfied, IPO gets approval for opening to public.
Step 7: RHP Publication
Red Herring Prospectus (RHP) published without price band for public information.
Step 8: Price Band Announcement
Company announces price band and IPO subscription dates.
Key Documents Required
- Company audited financial statements (last 3 years)
- Board resolutions and corporate documents
- Industry analysis and business overview
- Risk factors and mitigation strategies
- Management biographies
- Legal compliance certificates
- Underwriting agreements
Role of Merchant Bankers
Merchant bankers (investment banks) guide companies through the entire IPO process:
- Advise on IPO structure and pricing
- Prepare DRHP and prospectus
- Coordinate with SEBI and stock exchanges
- Manage marketing and investor roadshow
- Coordinate share allotment and listing
- Act as stabilizing agents post-listing
Timeline
Typical IPO Process: 3-6 months from board approval to listing
- • DRHP to SEBI approval: 30-45 days
- • Subscription period: 3 days (typically)
- • Allotment to listing: 3-5 days
Why Companies Go Public
- Raise capital for expansion and growth
- Improve brand value and credibility
- Create liquidity for founders and investors
- Use shares for acquisitions and employee benefits
- Meet regulatory requirements
- Access larger capital markets
Key Takeaways
- ✓ IPO process takes 3-6 months typically
- ✓ SEBI approval is crucial gate
- ✓ Merchant bankers guide the entire process
- ✓ Multiple regulatory approvals required
- ✓ Public disclosure of detailed information