The Securities and Exchange Board of India (SEBI) is set to enhance the initial public offering (IPO) approval process to improve efficiency. SEBI Chairperson Madhabi Puri Buch announced on Friday that the regulator is developing a templated offer document system. This system will allow companies to complete a standardized form, streamlining the approval process.
At an industry event organized by FICCI, Buch detailed SEBI’s plans to introduce an artificial intelligence tool designed to accelerate the review of IPO documents. The AI tool is expected to be operational by December. The initiative aims to simplify the IPO process, which has often been viewed as complex.
Under the new system, companies will use a template that requires completion of specific sections, with an additional column for explaining any complex or unique aspects. This approach is intended to reduce processing times and clarify the approval process. “The document will be precise, meaningful, and any variation will be explained separately,” Buch stated. She highlighted that the new process will streamline the approval timeline and demystify the IPO process.
Additionally, SEBI is developing a new fundraising procedure for listed companies that merges elements of rights issues and preferential allotments. This method aims to cut the approval duration for preferential issues from 42 days to 23 days by removing the need for SEBI’s approval and eliminating the requirement for merchant bankers. The new process will feature a simplified two-page document outlining the necessary details for investors.
Buch emphasized that this innovation is an internal development, not driven by the industry. A consultation paper will be released to discuss the proposal further. She also noted that expediting the IPO process is a priority, given current delays in eight applications due to regulatory and procedural hurdles.
To address issues in the IPO application process, SEBI will focus on returning incomplete or problematic documents to prevent genuine applications from being stalled. The regulator is also working on rationalizing disclosure requirements for loss-making companies.
Future initiatives include formalizing industry-standard forums and streamlining ongoing disclosure requirements under the Listing Obligations and Disclosure Requirements (LODR) framework. SEBI will also implement a settlement amount calculator on its website and develop a benchmarking agency to compare the performance of infrastructure investment trusts and real estate investment trusts.
Buch urged the market to swiftly adopt solutions from regulatory technology firms, as SEBI continues to integrate supervisory technology (Suptech) solutions.
