India's SEBI Enforces stricter IPO fund use and regulatory clean‑up rules

The Securities and Exchange Board of India (SEBI) requires listed companies that raise capital through public issues, rights issues, preferential issues or Qualified Institutional Placements to file a Statement of Deviation/Variation (SDV). The SDV details any divergence between the intended use of proceeds disclosed in the offer document and actual spending, with category‑wise comparisons of capital expenditure, working capital, marketing and other purposes. Submissions must be reviewed by the audit committee, reflected in the board report and certified by the statutory auditor, and are filed quarterly for main‑board firms (half‑yearly for SMEs) and later incorporated into the annual report until full utilization.

Separately, experts warn that delayed regulatory clean‑up – resolving historical compliance gaps, litigation, governance deficiencies and other SEBI‑related irregularities – can jeopardise an IPO’s market window. Even a three‑to‑six‑month postponement may expose issuers to adverse macro‑economic shifts, heightened volatility, election uncertainty and competing listings, reducing valuation and subscription levels. Prompt, thorough remediation of legal and governance issues is now a strategic prerequisite for successful IPOs in India’s increasingly scrutinised capital‑market environment.