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Draft Red Herring Prospectus

Draft Red Herring Prospectus .webp

Key Highlights

  • It is an initial disclosure document that companies submit to the Securities and Exchange Board of India (SEBI) when planning to raise funds through an Initial Public Offering (IPO).

  • Objective includes regulatory review, investor awareness and market feedback.

What is Draft Red Herring Prospectus (DRHP)?

It is an initial disclosure document that companies submit to the Securities and Exchange Board of India (SEBI) when planning to raise funds through an Initial Public Offering (IPO). It serves as the first detailed filing that outlines the company’s business operations, financial performance, risks, and objectives, though it does not specify the final issue price or the number of shares on offer.

Objective of the DRHP

  • Regulatory Review: SEBI examines the document for accuracy, compliance, and investor protection.

  • Investor Awareness: Potential investors gain insights into the company’s operations, governance, and future plans.

  • Market Feedback: Enables stakeholders to evaluate the company before the final IPO structure is approved.

Key Disclosures in a DRHP

A DRHP generally includes:

  • Overview of the company, its industry, and competitive landscape.

  • Detailed financial statements and performance track record.

  • Risk factors and regulatory considerations.

  • Information about promoters, management, and corporate governance.

  • Proposed utilization of IPO proceeds.

DRHP Vs RHP

DRHP (Draft Red Herring Prospectus): Filed with SEBI for review; subject to changes based on regulatory observations.

RHP (Red Herring Prospectus): The final approved document, incorporating SEBI’s feedback, and disclosing critical details such as issue size, price band, and IPO timeline.