IPO Process in India explained: this guide covers what it 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.
An Initial Public Offering (IPO) is the first sale of shares to the public by a company. Governed by SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 (SEBI ICDR), the IPO process in India is well-structured with specific timelines, disclosure requirements, and investor protections. This guide covers the complete process from decision to list.
Eligibility for IPO (SEBI ICDR Regulation 6)
- Net tangible assets > Rs. 3 crore in each of 3 preceding years
- Average consolidated pre-tax operating profits > Rs. 15 crore (3 out of 5 years), OR
- Net worth > Rs. 1 crore in each of 3 preceding years, OR
- Changed business: At least 75% proceeds used for specified purpose
- Alternative: QIB route (Regulation 6(2)) — no profit track record required if at least 75% of issue goes to QIBs
Key Participants
- Merchant Banker (BRLM): Lead Manager — coordinates entire IPO process, prepares DRHP, manages roadshow
- Registrar to Issue (RTI): Manages applications, allotment, refunds
- Underwriters: Guarantee subscription (if required)
- Auditors: Certify financial statements in DRHP
- SEBI: Regulates; issues observations on DRHP
- Stock Exchange: NSE/BSE — approves listing
IPO Process Steps
- Appoint BRLM and advisors: Select investment bank as lead manager
- Due diligence: BRLM conducts business, legal, financial, tax due diligence
- DRHP preparation: Draft Red Herring Prospectus — comprehensive disclosure document filed with SEBI
- SEBI filing and observations: SEBI issues comments within 30 days; company responds
- SEBI approval (observations letter): Valid for 12 months
- Exchange filing and approval
- Roadshow / Investor marketing: Pre-IPO presentations to institutions
- Price band announcement: Price band (floor and cap — max 20% range) announced
- Subscription: IPO open for 3 days; bids via ASBA/UPI
- Allotment and refund: Within 6 days of IPO close (T+6)
- Listing: Shares listed on exchange on T+6 (changed from T+10 in 2024)
Investor Categories and Reservation
| Category | Reservation |
|---|---|
| QIB (Qualified Institutional Buyers) | 50% (75% in QIB route) |
| Non-Institutional Investors (NII/HNI) | 15% |
| Retail Individual Investors (RII) | 35% |
Post-Listing Compliance
- SEBI LODR quarterly/annual disclosure obligations
- Minimum promoter lock-in: 18 months (50% of post-issue promoter holding); balance 6 months
- Anchor investor lock-in: 30 days
Need Expert Help?
TaxClue's CA and legal team can assist you. Contact us or see our services.
Key Facts About IPO Process in India
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What is the SEBI ICDR eligibility for an IPO?
Company must have net tangible assets > Rs. 3 crore in 3 prior years, plus average pre-tax operating profits > Rs. 15 crore in 3 of 5 years, or use the QIB route with 75% allocation to QIBs.
What is a DRHP?
Draft Red Herring Prospectus — the comprehensive disclosure document filed with SEBI before an IPO, containing company financials, risks, objects of issue, and promoter details.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
IPO Process in India: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.
Related Services & Guides
Why This Matters
Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in corporate laws are revised periodically, so it helps to review your obligations at the start of each financial year. Professional guidance from a qualified CA, CS or advocate ensures that filings are accurate and submitted well before the due date.
Small businesses and startups especially benefit from setting up a simple compliance calendar to track recurring deadlines. Government portals now allow most applications and filings to be completed online, reducing paperwork and turnaround time. Keeping your PAN, registration certificates and board resolutions organised makes every subsequent filing faster. When in doubt, it is better to seek clarification early rather than risk a notice or a late-filing penalty later.
A clear understanding of the applicable law helps you make confident, well-informed business decisions.