What Is an Initial Public Offering (IPO)?
Initial Public Offering Meaning Under Indian Law
Under Indian legislation, an Initial Public Offering (IPO) signifies the process whereby a company issues its shares to the public for the first time. As per the Companies Act, 2013, specifically under Section 23, a public company may issue securities to the public through a prospectus. The Act mandates that companies intending to offer securities publicly must prepare and file a prospectus that clearly outlines all requisite disclosures, ensuring transparency to potential investors.
Further regulatory clarity is provided by the Securities and Exchange Board of India (SEBI), the statutory regulator responsible for overseeing capital markets in India. Under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations), an IPO is explicitly described as an issuance of securities by an unlisted issuer company to the public, thereby transforming a private entity into a publicly traded corporation.
Key Concepts: IPO vs. FPO (Follow-on Public Offering)
An Initial Public Offering (IPO) refers specifically to the first-ever issuance of shares by a private company to public investors, effectively listing its shares on a recognized stock exchange in India (BSE or NSE). Post-IPO, the company’s securities become publicly tradable, and the ownership structure shifts from private shareholders to broader public ownership.
In contrast, a Follow-on Public Offering (FPO) occurs when an already publicly-listed company issues additional shares to the market after its IPO. Unlike IPOs, FPOs are subsequent offerings made by listed entities to raise additional capital for expansion, debt repayment, or other corporate purposes.
Key distinctions:
- IPO introduces the company to public markets for the first time, leading to a broader shareholder base and significant liquidity for early investors and promoters.
- FPO allows already listed companies to raise further funds or dilute promoters’ holdings, with existing shareholders’ interests potentially diluted due to the increase in total shares outstanding.
Why Do Companies Go for an IPO in India?
Capital Generation and Liquidity
The primary motivation for companies choosing the IPO route in India is the opportunity to raise substantial capital directly from public investors. Funds raised through IPOs enable businesses to expand operations, invest in technology, repay debts, or pursue strategic acquisitions. Post-listing, the company’s shares become liquid assets tradable on stock exchanges, providing existing shareholders, including promoters and private investors, a clear exit route or partial divestment opportunity.
The process and conditions for raising funds via IPO are governed by the aforementioned SEBI ICDR Regulations, ensuring the issuer company adheres strictly to disclosure norms, pricing guidelines, minimum promoter contribution requirements, and investor protection mechanisms.
Enhanced Visibility and Credibility
Conducting an IPO significantly enhances a company’s visibility and market presence. Listing on reputed stock exchanges (NSE or BSE) brings increased brand recognition and credibility among stakeholders, including potential customers, business partners, and financial institutions. Being publicly traded often improves investor perception, signaling that the company meets stringent regulatory criteria and is accountable to a broader audience.
This market positioning is indirectly supported by the robust regulatory oversight by SEBI, as companies complying with strict disclosure and compliance norms under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations) are generally perceived as transparent, trustworthy, and stable entities.
Regulatory Mandates and Corporate Governance
Post-IPO, Indian companies are required to strictly adhere to rigorous corporate governance and transparency norms as prescribed by SEBI LODR Regulations. These regulations mandate listed companies to implement robust internal controls, establish comprehensive disclosure practices, appoint independent directors, and form dedicated committees (e.g., Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee) to safeguard minority shareholders’ interests.
Furthermore, listed companies must regularly disclose financial results, insider trading practices, and substantial corporate developments to both SEBI and the stock exchanges, thus maintaining continuous transparency. Non-compliance can trigger strict regulatory sanctions and penalties under SEBI Act, 1992 and relevant SEBI guidelines, reinforcing companies’ accountability towards shareholders and investors alike.
This enhanced governance environment not only attracts institutional investors who prefer entities with strong corporate governance practices but also ensures sustained compliance and accountability, ultimately safeguarding investor interests and maintaining market integrity.
Governing Bodies and Legal Framework for IPOs in India
Role of SEBI (Securities and Exchange Board of India)
SEBI is the primary regulator overseeing IPOs in India, laying down the framework through statutes and detailed regulations. The key regulation is the SEBI ICDR Regulations, which governs eligibility to tap the capital markets, disclosure standards, pricing of issues, and post-issue lock-in of shares.
SEBI’s ICDR rules stipulate financial eligibility criteria for companies planning an IPO – for example, having at least ₹3 crore of net tangible assets in each of the last three years, ₹15 crore average pre-tax operating profit in three of the previous five years, and a minimum ₹1 crore net worth for each of the last three years. (Companies not meeting these financial thresholds can still proceed with an IPO via the “QIB route,” whereby a majority of the issue is allotted to institutional buyers as a qualification.)
SEBI’s regulations also mandate comprehensive disclosures in the offer document, ensuring the prospectus provides all material information about the company’s business, financials, risk factors, and the objects of the issue in the format specified by SEBI. IPO pricing is largely market-driven under SEBI’s framework – issuers are free to determine the price or a price band in consultation with merchant bankers, subject to certain norms.
In book-built IPOs, a price band is announced and investor demand is aggregated to discover the final price; SEBI requires that the band’s spread is no more than 20% and that it be published at least 5 working days before the issue opens.
To align promoters’ interests with new investors, the ICDR Regulations impose lock-in provisions: promoters must contribute at least 20% of the post-issue capital, and this minimum promoter stake is locked-in for 3 years from allotment; the remaining pre-IPO promoter shareholding is locked for 1 year.
Likewise, any other pre-IPO shares (held by early investors) are generally locked-in for 1 year, preventing immediate sale after listing. These SEBI rules – from eligibility filters to lock-in – ensure that only companies with a certain track record come to market and that promoters retain a long-term commitment to the business post-IPO.
Companies Act, 2013: Key Provisions
Under the Companies Act, 2013, an IPO is also subject to various provisions that protect investors and govern the issuance of shares:
- Section 26 (Prospectus Content) – Every prospectus issued by a public company must include the information specified by SEBI and a declaration confirming that the Act’s requirements have been complied with. In practice, this ties the contents of the IPO prospectus to SEBI’s disclosure requirements and ensures the document is true and complete in all material respects.
- Section 35 (Civil Liability for Misstatements) – If a prospectus contains any untrue or misleading statement or omission of material fact and an investor sustains loss by relying on it, the company and responsible persons (directors, promoters, and experts who consented to statements) are liable to pay compensation. This provision gives investors a civil remedy against false statements, apart from regulatory penalties, thereby encouraging accuracy in IPO disclosures.
- Section 27 (Variation of IPO Objects) – The Act restricts companies from changing the purposes for which the IPO funds are to be used, as stated in the prospectus, without shareholder approval. Any proposal to vary the terms of a contract or the stated objects in the prospectus must be approved by a special resolution in a general meeting.
Moreover, if such a variation is approved, shareholders who do not agree with the change have a right to exit: the promoters or controlling shareholders must give dissenting shareholders an exit offer at a price and conditions specified by SEBI. This ensures that funds raised from the public are used for the declared purposes or not at all, unless investors explicitly consent to a change.
Stock Exchanges and Listing Requirements (NSE & BSE)
Stock exchanges in India – principally the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) – have their own listing criteria that a company must satisfy to list its shares post-IPO. These criteria, set in consultation with SEBI, ensure that only companies of a certain size and governance standard are listed on the exchange.
The company should also have a positive net worth and not be referred to insolvency proceedings; in fact, exchanges require proof that the company has not been insolvent or facing winding-up orders, and that it has a satisfactory redressal mechanism for investor grievances in place. The BSE has similar financial and organizational requirements. These ensure that the IPO candidate is financially sound and has a history that regulators and investors can scrutinize.
Notably, exchanges also insist that the IPO’s entire share capital be in dematerialized (electronic) form and that the company obtain in-principle approval from the exchange before the IPO, confirming that it will meet listing norms.
Once listed, companies must adhere to continuous disclosure and compliance standards as per the SEBI LODR Regulations. This framework imposes ongoing obligations such as: timely submission of quarterly and annual financial results, disclosures of the shareholding pattern, corporate governance compliance reports, and prompt intimation of material events or information to the stock exchange
Significant developments like mergers, acquisitions, changes in key management, or any other price-sensitive information must be disclosed to the exchanges within 24 hours under LODR’s material events disclosure regime. Furthermore, the LODR rules mandate maintaining a minimum number of independent directors and other governance best practices, adoption of a code of conduct, compliance with insider trading regulations, and so on – all aimed at protecting shareholders in the post-listing phase.
Step-by-Step Initial Public Offering Process in India
Draft Red Herring Prospectus (DRHP) and SEBI Review
The IPO process kicks off with the preparation of the Draft Red Herring Prospectus (DRHP). This is the preliminary registration document that the company (with the help of its merchant bankers and legal advisors) files with SEBI and the stock exchanges. The DRHP contains virtually all the information about the company and the offering – business description, financial statements, risk factors, usage of proceeds, management details, etc. – except the final price or number of shares being offered.
Once the DRHP is filed, SEBI undertakes a detailed review to ensure compliance with the prescribed disclosure standards. SEBI may issue comments or objections pointing out any deficiencies or seeking clarifications. The company must publish the DRHP on SEBI’s website and on stock exchange websites for public feedback.
During the review period, SEBI often asks for additional information or revisions; for example, it may ask the issuer to highlight certain risk factors, update financial data, or clarify use of funds. The merchant bankers coordinate with SEBI to resolve all queries.
Regulatory timeline: SEBI is expected to provide its initial observations within 30 days of receiving the DRHP (excluding the time taken by the company to respond to queries) as per SEBI’s performance norms. Once SEBI’s observations are addressed and it issues a final observation letter (i.e. green light), the company can proceed to file the Red Herring Prospectus (RHP) with the Registrar of Companies (RoC).
The RHP is the near-final prospectus that is circulated to potential investors before the IPO opens – it includes the IPO’s price band or floor price (for a book-built issue), the total issue size, and all other details, but still leaves out the exact final. The RHP must be registered with the RoC and is then a public legal document. Notably, if there are significant changes between the DRHP and RHP, the company may be required to refile the DRHP with SEBI.
After the RHP filing, the IPO timetable (opening and closing dates) is announced, and the company, through its underwriters, publishes ads with issue details and embarks on marketing the issue to investors. Importantly, in a book-built IPO, the final prospectus (called “Prospectus” or sometimes “Final Red Herring Prospectus”) with the exact price and share count is filed with RoC after the issue closes and pricing is determined – completing the documentation stage of the IPO.
Book Building Process and Price Band Determination
Most large IPOs in India follow the book building method for price discovery. In this process, rather than setting a fixed price for the IPO shares upfront, the issuer specifies a price band – a lower bound and upper bound within which investors can bid for shares. This price band is decided by the company in consultation with the Book Running Lead Managers (BRLMs) based on factors like the company’s valuation, peer comparisons, and investor appetite gauged during pre-marketing.
The band or at least the floor price must be announced at least 5 working days before the IPO opens to give investors time to consider the pricing. Once the issue opens, investors place their bids through the exchange’s online IPO system, specifying the number of shares and the price they are willing to pay per share within the band.
Retail investors are also allowed to bid “at Cut-off,” which means they will accept the allotment at the final discovered price – this option simplifies bidding for small investors, and only retail individual investors can choose the cut-off option.
During the bidding period, the bids accumulate in the electronic order book. The BRLMs and the stock exchange provide regular updates on the subscription levels in various investor categories (retail, QIB, etc.) throughout the period. After the issue closure, the BRLMs evaluate the total demand at various price points – essentially plotting a demand curve. The highest price at which the total shares on offer can be sold is determined as the cut-off price.
In practice, the bankers may have a discretion to set the final price anywhere within the band based on the quality of the order book, but typically it will be at or near the top of the band if the issue is oversubscribed. This mechanism is what truly discovers the price that investors are willing to pay. Bids below the cut-off are rejected. This process is summarized as the BRLM “arriving at a price” based on the bids received.
The book-building process, combined with these allocation rules, promotes both price efficiency and fair access. The role of the underwriters during this phase is crucial – they conduct roadshows and investor presentations across cities to solicit bids, explain the company’s story, and build enthusiasm for the offering. They also underwrite the issue to a certain extent, meaning they may assure subscription or themselves subscribe to any shortfall.
Application, Allotment, and Listing on Stock Exchanges
Investors can apply for IPO shares during the offer period using the ASBA (Application Supported by Blocked Amount) process. ASBA is a mechanism that blocks the application money in the investor’s bank account rather than transferring it immediately to the issuer. This way, the investor continues to earn interest on the funds (for savings accounts) and the money is debited only for the amount of shares actually allotted.
All IPO applications – whether by retail or institutional investors – must be through ASBA to streamline and safeguard the payment process. Practically, investors can apply online via their bank’s net-banking ASBA service or physically submit ASBA forms to designated banks/brokers.
Each investor is required to have a demat account and a PAN number to apply. Once the bidding period closes and the issue is fully subscribed, the appointed IPO registrar takes over to finalize the basis of allotment in consultation with the stock exchanges. If the retail category is oversubscribed, the allotment to retail is typically done by a computerised lottery.
Investors who bid at cut-off are treated equally with those who put in a highest-price bid, insofar as both are considered at the final price. Once the allotment is finalized and approved by the stock exchange, the registrar processes refunds for any unallotted or partially allotted applications.
Under ASBA, this simply means unblocking the unused amount in the bank accounts. SEBI has tight timelines for this post-issue process – in recent years, the timeline from IPO close to listing was T+6 working days (T being issue close). By the 6th day from closure, all allotments, refunds, and credit of shares are to be done, and the shares are listed on the exchange.
When the company’s shares list on the stock exchanges, typically a week or so after the IPO, the IPO process culminates in the start of trading. The listing day is when the market determines the trading value of the new stock. The company’s shares become freely tradable and the company becomes subject to continuous listing requirements from that day.
If an insufficient number of subscribers or amount is garnered (i.e., if the IPO fails to receive at least 90% subscription or the minimum number of allottees), the issue is canceled and funds are returned to applicants. In successful IPOs, after listing, investors who got allotment can choose to hold or sell their shares on the market, and new investors can now buy the shares.
The IPO proceeds are transferred to the company’s account after allotment, and the company can start utilizing the funds for the projects stated in the prospectus. In case of an Offer for Sale (OFS) component, the selling shareholders receive their portion of proceeds. The completion of listing marks the company’s transition to a publicly-held entity with a diversified shareholder base.
Post-IPO Compliance and Lock-In Period
Becoming a public listed company brings ongoing compliance responsibilities. Post-IPO, the company must comply with all provisions of the SEBI LODR Regulations and corporate governance requirements. This means, for example, filing its financial results every quarter, along with a Limited Review by auditors, within the deadline; informing stock exchanges of any material development promptly; and ensuring that the shareholding of promoters and public remains in compliance with the minimum public shareholding norms.
The company’s board must include the requisite proportion of independent directors, and committees like the Audit Committee, Stakeholders’ Relationship Committee, and Nomination & Remuneration Committee must be constituted and meet regularly as per the law. Yearly, the company needs to file an Annual Report with detailed disclosures and hold an Annual General Meeting for shareholders.
Moreover, the utilization of IPO proceeds is specifically tracked: as per LODR Regulation 32, the company is required to submit to the exchange a statement of funds utilized vs. the objects stated, and if there is any deviation or variation in the use of proceeds, it must be disclosed to shareholders and explained. This acts as a check against misallocation of the raised funds.
One distinct regulatory requirement after an IPO is the lock-in of certain shares, as earlier noted. Promoters’ shares are locked-in to ensure they retain a significant stake for a period following the IPO. Specifically, SEBI mandates that the promoters’ minimum contribution (20% of the post-issue capital) cannot be sold for three years from the date of allotment in the IPO. The balance of the promoters’ pre-IPO shares is also locked-in for one year.
Likewise, any other pre-IPO investor (such as private equity funds, venture capital, or other shareholders who bought shares before the IPO) is generally prohibited from selling their shares for a period of one year from listing. These lock-in periods prevent a scenario where insiders immediately cash out after the IPO, which could harm post-listing share prices and be unfair to new investors.
Finally, even after the IPO, SEBI continues oversight through periodic reports (the company must file shareholding pattern, financials, corporate governance reports under LODR and may take action for any violation of securities laws (e.g. insider trading or misleading statements). The stock exchanges too monitor compliance with listing conditions.
The regulatory framework – a combination of the Companies Act, SEBI’s ICDR and LODR Regulations, stock exchange bylaws, RBI/FEMA rules for foreign capital, and taxation laws – thus provides a comprehensive oversight of IPOs in India. It ensures that companies going public do so with adequate disclosures and accountability, that the issue process is fair and accessible to different classes of investors, and that post-listing, the companies continue to uphold transparency and good governance, thereby protecting investor interests and the integrity of the capital markets.
Pros and Cons of Initial Public Offering in India
Advantages: Capital Infusion and Growth Opportunities
- Immediate access to capital for expansion: An IPO allows a company to raise substantial funds from the public. These funds can be deployed for business expansion, new projects, research & development, or to retire existing debt. The DRHP must detail the “Objects of the Issue,” which often include such growth initiatives. By going public, companies unlock capital without the repayment obligations of loans, providing long-term funding for growth.
- Increased visibility and credibility: Listing on a stock exchange elevates a company’s profile. Post-IPO, the company must adhere to SEBI’s governance and disclosure norms, which instills greater transparency and accountability. This regulatory oversight under the SEBI LODR Regulations enhances investor and stakeholder confidence. A public listing often signals that the company has met rigorous regulatory standards, thereby improved its reputation and made it easier to attract customers, business partners, and talent.
- Market-driven valuation and liquidity: An IPO establishes a market-based valuation for the company’s shares through the price discovery in book-building and subsequent trading. The stock price, determined by investor demand, serves as an objective benchmark of the company’s worth. This can potentially lead to higher valuations than private funding if market sentiment is positive.
Moreover, an IPO provides liquidity to existing shareholders (founders, early investors) by enabling them to sell some of their holdings (via an offer for sale) on the stock exchange. The diversified public shareholding also spreads risk and enables a wide investor base to participate in the company’s growth.
Disadvantages: Regulatory Burden and Market Volatility
- Compliance requirements and costs: Going public subjects the company to extensive ongoing compliance under laws and SEBI regulations. The SEBI LODR Regulations impose continuous disclosure and corporate governance obligations – e.g. quarterly financial reporting, maintaining a certain board composition (with independent directors), constituting audit and other committees, etc. Complying with these rules results in significant legal, accounting, and administrative costs. Filings, audits, investor relations, and regulatory reporting become a regular part of operations.
- Shareholder scrutiny and disclosure of information: Public companies are subject to greater scrutiny from shareholders, analysts, and regulators. They must disclose sensitive financial and business information regularly (business performance, risk factors, material events, etc.), as required by law. This transparency, while beneficial for investors, can be a double-edged sword.
Competitors and customers gain access to detailed information about the company’s operations and finances, which could be exploited to the company’s disadvantage. Management also faces pressure to meet shareholder expectations and market analysts’ forecasts each quarter.
Additionally, the original owners may experience a dilution of control – important decisions now require board and shareholder approval, and activist investors can influence corporate policy. Initial promoters often “lose independence as new [shareholders] come in,” meaning they must accommodate the interests of public shareholders in running the company.
- Market sentiment and volatility risks: Once listed, a company’s stock price is exposed to market fluctuations beyond its direct control. General economic conditions, market sentiment, and global events can cause share price volatility unrelated to the company’s fundamentals.
A downturn in the market can erode the company’s market capitalization quickly, affecting its public image and making any secondary fundraising (e.g. follow-on offerings) more difficult. Management may feel short-term pressure to focus on stock performance rather than long-term strategy.
Furthermore, the timing of an IPO is critical – poor market sentiment at listing can result in the stock trading below the issue price, as has occurred in cases where broader market volatility dampened investor enthusiasm. In extreme cases, companies may even defer or withdraw IPO plans due to unfavorable market conditions. Thus, market volatility and external factors introduce risk to both the IPO’s success and the post-listing performance of the stock.
Recent Regulatory Changes
Updates to SEBI’s Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018
SEBI has introduced several amendments to the ICDR Regulations, 2018 to facilitate IPOs and strengthen disclosure standards:
Introduction of confidential pre-filing of offer documents: SEBI added a new Chapter IIA to the ICDR Regulations to permit pre-filing of the DRHP on a confidential basis with SEBI and stock exchanges. Under this optional mechanism, a company can file a “Pre-Filed DRHP” privately and obtain SEBI’s observations/feedback before making information public. This allows issuers to keep commercially sensitive information out of the public domain until they are certain about launching the IPO. It also gives an opportunity to address regulatory concerns early, resulting in a more robust draft prospectus when it is eventually released to investors.
Notably, the timeline for launching the IPO has been extended – an issuer using the confidential route has 18 months from receiving SEBI’s final observations to open the IPO. This extended window provides flexibility to wait for favorable market conditions after regulatory clearance. Overall, the pre-filing reform is aimed at reducing the execution risk of IPOs.
Enhanced disclosure of key financial metrics and pricing justifications: SEBI’s amendments in late 2022 also tightened disclosure standards in IPO offer documents, particularly the “Basis for Issue Price” section. Key Performance Indicators (KPIs) that the company uses to track its business must now be disclosed in the prospectus in simple, defined terms, and certified by auditors or an independent accountant. This helps investors understand the drivers of the company’s performance beyond traditional financial metrics. Moreover, issuers are required to justify their IPO pricing by disclosing the pricing of significant past transactions in their shares.
Easing of promoter contribution and lock-in requirements: To accommodate the shareholding patterns of new-age companies (where founders may not hold large stakes), SEBI relaxed the Minimum Promoters’ Contribution (MPC) norms in 2023. Normally, promoters must contribute at least 20% of post-issue capital and lock-in those shares for a specified period (per Regulation 14 of ICDR 2018).
The 2023 amendment broadens the pool of eligible contributors: now other members of the promoter group and even non-promoter shareholders holding ≥5% of post-issue capital can contribute to meet the shortfall in promoters’ contribution without being classified as “promoters”. This gives companies more flexibility if the main promoter’s stake is below 20%.
Another change allows certain pre-IPO investors’ shares to count toward MPC – compulsorily convertible securities held for over a year can be included, provided they are converted to equity before the Red Herring Prospectus filing and full disclosure of their terms is made in the DRHP.
These tweaks enable venture capital and private equity investors to support the IPO by partly fulfilling promoter lock-in requirements, which was long awaited for new-age businesses with spread-out ownership. Overall, the intent is to not unfairly burden founders who have diluted holdings and to simplify compliance while still ensuring skin-in-the-game through lock-in of a portion of shares.
Streamlining the IPO process and reducing procedural costs: SEBI has also made procedural improvements to make the IPO process more efficient. One such change is the reduction of the minimum bid period extension in case of force majeure or disruptive events during the IPO.
Previously, if an IPO’s bidding period was interrupted by a force majeure event, SEBI required extending the issue remain open for at least 3 additional working days. This minimum extension has now been cut to 1 working day, allowing issuers flexibility to close the issue sooner once normalcy returns.
The rationale is to avoid unnecessary delays in completing the offering and to promptly unblock investor funds if the issue is oversubscribed or completed. Another significant change is the removal of the 1% security deposit requirement. Given that refund-related complaints have reduced drastically after the introduction of ASBA, SEBI omitted the 1% deposit mandate. Eliminating this requirement reduces the upfront cash outlay for companies and signals SEBI’s comfort with the robustness of modern IPO payment systems.
Additionally, SEBI updated the underwriting framework in 2023 – if an issuer opts for underwriting to ensure subscription, the underwriting agreement must be in place and disclosed in the RHP, including the maximum shares the underwriters would subscribe to in case of undersubscription. This change, under the SEBI (ICDR) Second Amendment Regulations, 2023, brings greater transparency and assurance about issue success, but also means companies must firm up backup investment commitments before launching the IPO.
Conclusion: Strategizing Your IPO for Success in India
A successful Initial Public Offering (IPO) in India involves a rigorous process governed primarily by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The IPO process begins with appointing merchant bankers, auditors, and legal advisors, followed by drafting and submitting a DRHP to SEBI, disclosing detailed company information including financial statements, risk factors, and issue objectives. Upon receiving SEBI’s observations, the company finalizes the Red Herring Prospectus, initiates pricing through a book-building or fixed-price method, opens the subscription period, and subsequently lists on stock exchanges complying with post-listing requirements outlined in SEBI (LODR) Regulations, including ongoing governance and disclosure obligations.
An IPO provides companies immediate access to significant capital for growth and increased market credibility, enabling easier avenues for loans against IPO shares as collateral under guidelines by RBI and SEBI, but simultaneously subjects them to substantial regulatory compliance costs, ongoing scrutiny, and market volatility risks. Therefore, businesses must strategically assess their readiness and market conditions, clearly balancing growth opportunities and financial visibility against compliance burdens and potential risks inherent in public listings under Indian law.
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