Fund raising through IPO: Why Secretarial due diligence must start 18 months before filing the DRHP

When promoters and CFOs evaluate IPO readiness, the initial focus is invariably on EBITDA margins, growth projections, and merchant banker selection.

Yet, in practice, what frequently stalls a Draft Red Herring Prospectus (DRHP) or triggers protracted SEBI and stock exchange observations is historical corporate housekeeping.

Having coordinated equity and debt capital market transactions - including public issues, rights issues, and bond issuances over close to three decades - here are 4 secretarial friction points that routinely catch unlisted boards off guard:

🔹 Historical Capital Trajectory & Past Allotments: Missing PAS-3 records, defective share certificate stamping, or un-reconciled rights/bonus issuances dating back 7 to 10 years.

🔹 Promoter Group & Group Company Demarcation: The rigorous disclosure mandate under SEBI ICDR requires complete clarity on inter-corporate loans, cross-guarantees, and common directorships.

🔹 Composition & Independent Director Induction: Transitioning from a closely held board to an independent, committee-driven governance framework compliant with both the Companies Act, 2013 and SEBI (LODR), 2015 standards.

🔹 Pre-IPO Restructuring Clean-up: Amalgamations or slump sales must be executed with robust valuation reports, clean ROC satisfaction of charges, and unambiguous court/NCLT order compliances.

IPO compliance is not a last-minute sprint before the roadshow; it is an institutional discipline built into the corporate fabric well in advance.

Promoters, CFOs, and Investment Bankers: At what stage do you typically commission an independent secretarial hygiene audit ahead of a listing exercise?

At Sandeep Lakhotia & Associates, we conduct specialized Pre-IPO Secretarial Due Diligence and Capital Raising Compliance Reviews to ensure institutional readiness before regulatory filings. Connect directly via DM or at sandeeplakhotia2013@gmail.com