The Draft Red Herring Prospectus (DRHP) is central to IPO compliance, detailing risks, financials, and management plans, with auditors certifying financial statements.
DRHP: IPO Disclosure and Auditor’s Role
The Draft Red Herring Prospectus (DRHP) is a foundational document in Indian IPOs, filed with SEBI under the SEBI (Issue of Capital and Disclosure Requirements) Regulations. It contains preliminary disclosures including risk factors, use of proceeds, capital structure, and management profiles—excluding final price and size.
Financial statements in the DRHP must be audited as per the Companies Act, 2013, with auditors liable for accuracy under the Chartered Accountants Act and SEBI regulations. The auditor’s report forms the basis for due diligence by merchant bankers and legal teams. Post-DRHP review, SEBI may seek clarifications before permitting the final prospectus.
Legal counsel must ensure full compliance with disclosure mandates to avoid delays or enforcement. Recent SEBI emphasis includes ESG factors, related-party transactions, and promoter backgrounds. A thorough review of DRHP content is critical to prevent post-listing litigation and ensure market confidence.
Citations
- SEBI ICDR Regulations
