SEBI ICDR Regulations explained: this guide covers what SEBI ICDR Regulations means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 (ICDR) govern the public issue of securities (IPO, FPO, rights issues, bonus issues) by listed and unlisted companies in India. An IPO (Initial Public Offering) brings private company shares to public markets for the first time.
Types of Issues Under ICDR
| Type | Description |
|---|---|
| IPO (Initial Public Offer) | First-time public offer by an unlisted company |
| FPO (Follow-on Public Offer) | Subsequent public offer by a listed company |
| Rights Issue | Offer to existing shareholders in proportion to holding |
| OFS (Offer for Sale) | Existing shareholders selling shares (no fresh capital raised) |
| SME IPO | IPO on SME platform (BSE SME/NSE Emerge) for smaller companies |
IPO Eligibility Requirements
For Main Board IPO
- Net tangible assets ≥ Rs.3 crore for 3 years (or Rs.15 crore average EBITDA for 3 years), OR
- Net worth ≥ Rs.1 crore in each of the 3 preceding years, OR
- Profitability: Net profits from operations in at least 3 of the immediately preceding 5 years, OR
- QIB route: Mandatory allotment of 75% to QIBs (for loss-making companies)
IPO Process Timeline
- Appointment of intermediaries: Investment bank (lead manager/BRLM), registrar, legal counsel, auditors
- Due diligence and DRHP preparation: 3-6 months typically
- DRHP filing with SEBI: Lead manager files Draft RHP; SEBI observes within 30 days
- SEBI observations/comments: Company responds, incorporates changes
- RHP filing with SEBI/ROC: Final Red Herring Prospectus filed; price band added
- Roadshow: Management meets institutional investors; 2-3 weeks before opening
- Anchor investor allocation: 1 day before IPO opens
- IPO open period: 3 working days
- Basis of allotment: 6 working days after close; published in newspapers
- Listing: On NSE/BSE within 6 working days of issue close
Price Band and Book Building
- Price band = cap/floor ratio not more than 1.2× (e.g., floor Rs.100, cap Rs.120 max)
- Investors bid at any price within the band or at the cut-off price
- Issue price = "cut-off price" = highest price at which entire issue is subscribed
- All applicants who bid at or above cut-off price are allotted at the cut-off price
Issue Allocation
| Category | Allocation |
|---|---|
| QIBs (banks, FIIs, MFs, insurance companies) | 50% (at least) |
| Non-Institutional Investors (NIIs / HNIs) — above Rs.2 lakh | 15% |
| Retail Individual Investors (RIIs) — up to Rs.2 lakh | 35% |
| Employee Reservation (optional) | Up to 5% of issue size |
| Anchor investors (subset of QIB) | Up to 60% of QIB portion |
DRHP Mandatory Disclosures
- Company history, promoter background, group companies
- Risk factors (prominently disclosed, specific and quantified where possible)
- Objects of the issue: use of IPO proceeds (specific projects, working capital)
- Financial statements: last 3 years audited; 6 months interim for recent period
- Related party transactions (RPTs) for 3 years
- Legal proceedings outstanding and contingent liabilities
- Promoter selling shares (OFS component) — lock-in obligations
Lock-In Requirements Post-IPO
- Promoters' minimum 20% contribution: locked for 3 years from allotment date
- Promoters' remaining shares: locked for 1 year
- Pre-IPO shareholders (investors, ESOP holders): 6 months lock-in
- Anchor investors: 30 days lock-in
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