SEBI Extends IPO Size Revision Relaxation Till March 31

India's Securities and Exchange Board (SEBI) has extended until March 31, 2027, a relaxation rule that allows companies to adjust the size of their initial public offerings (IPOs) without submitting fresh draft offer documents. This relief permits eligible issuers to increase or decrease the fresh issue component by up to 50%, as long as certain conditions are met.

SEBI announced the extension on October 12, updating the previous deadline of September 30, 2026. The decision comes amid ongoing market volatility, providing companies extra flexibility to reassess their fundraising plans in response to changing conditions. Under the previous rules, companies had to submit new offer documents if the issue size changed by more than 20%.

This temporary relaxation allows for reassessment of capital needs without restarting the regulatory filing process. However, the flexibility is limited to the fresh issue component, which involves issuing new shares, and does not permit unrestricted changes to the overall IPO or its purpose. Companies must ensure their IPO's primary objective remains unchanged and explain the reasons for any adjustments in the fresh issue size.

Book-running lead managers must certify that the proposed revisions comply with regulations, and they must update the draft red herring prospectus (DRHP) to reflect the revised issue size. These changes must also be communicated through an addendum to the offer document, ensuring investors receive updated information. By extending the relaxation, SEBI aims to balance the need for fundraising flexibility with the obligations of transparency and disclosure.