An Initial Public Offer (IPO) is one of the most significant milestones in a company’s lifecycle. With 375 IPO’s that came in 2025 and approx. 190 IPOs lined up in 2026, here is the step-by-step guide for bringing the IPO of your company on Main Board. This guide Simplifies the journey to a Main Board listing by breaking it down into three core phases: pre-IPO preparation, the live IPO period, and post-IPO responsibilities. The entire process is mainly governed by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. ICDR regulations are designed to protect investors by regulating how companies bring their public issue and ensure market integrity.
1. The Pre-IPO Phase: Laying the Foundation for Success
Before even the first investor applies, an issuer must undergo a rigorous preparation phase. This involves meeting strict eligibility criteria, assembling a team of SEBI registered expert intermediaries, and ensuring all corporate governance and compliance requirements are met.
1.1. The Eligibility Test : Can Your Company Bring an IPO ?
Before embarking on the IPO journey, an issuer must meet specific eligibility criteria set by the Securities and Exchange Board of India (SEBI) for a Main Board listing.
IPO Red Flags: Who Isn’t Eligible?
Regulation 5 of the SEBI (ICDR) Regulations outlines several conditions that would render an issuer ineligible to make an IPO. These include:
- The issuer, its promoters, directors, or selling shareholders are debarred from accessing the capital market by SEBI.
- Any of the issuer’s promoters or directors is also a promoter or director of another company that is debarred by SEBI.
- The issuer or any of its promoters or directors is classified as a willful defaulter, a fraudulent borrower, or a fugitive economic offender.
- The issuer has outstanding convertible securities or any other right which would entitle a person to receive equity shares that are not converted before filing the Red Herring Prospectus (an exception is made for employee stock options).
1. Passing the Eligibility Test
If an issuer is clear of the red flags, it can qualify for an IPO through one of two primary routes as per Regulation 6.
The financial figures and eligibility criteria under Regulation 6 of the SEBI (ICDR) Regulations, 2018 must be presented on a restated and consolidated basis in the offer document
The Profitability Route (Regulation 6(1))
This is the standard route for companies with a consistent track record. The key conditions are:
- Net Tangible Assets: At least ₹3 crore in each of the preceding three full years, of which not more than 50% are held in monetary assets. (Note: If monetary assets exceed this 50% threshold, the issuer must have firm commitments for the use of such excess funds in its business or projects).
- Average Operating Profit: At least ₹15 crore on average during the preceding three years, with a positive operating profit recorded in each of those three years.
- Net Worth: At least ₹1 crore in each of the preceding three full years.
- Company Name Change: If the issuer’s name was changed within the last year, at least 50% of its revenue for the preceding full year must have been earned from the activity suggested by the new name.
2. The QIB Route (Regulation 6(2))
If an issuer does not meet the conditions of the Profitability Route, it can still proceed with an IPO. This alternative route requires the issue to be made through the book-building process, and the issuer must undertake to allot at least 75% of the net offer to Qualified Institutional Buyers (QIBs).
1.2. Assembling Your Team: Key Intermediaries required
An IPO is a complex, multi-faceted project that cannot be executed alone. Regulation 23 mandates the appointment of several SEBI-registered intermediaries to manage the process. The issuer shall, in consultation with the lead manager(s), appoint other intermediaries which are registered with the SEBI after the lead manager(s) have independently assessed the capability of other intermediaries to carry out their obligations.
Your core team will include:
- Lead Manager(s): One or more SEBI-registered merchant bankers who act as the primary managers of the entire issue, guiding the company through every step.
- Registrar to the Issue: An entity responsible for managing the application process, finalizing the basis of allotment, and processing share credits and refunds.
- Bankers to the Issue: Appointed to handle the financial transactions related to the IPO, including the collection of application money.
- Compliance Officer: A qualified Company Secretary responsible for monitoring the compliance of the securities laws and for redressal of investors’ grievances.
1.3. Critical Corporate Compliances
Based on Regulation 7, the issuer must meet several critical pre-filing conditions to ensure its corporate house is in order.
| Compliance Requirement | Description |
| Stock Exchange Approval | Obtain an in-principle approval for listing from one or more stock exchanges. |
| Dematerialisation | Enter into an agreement with a depository. The promoters’ specified securities must be held in dematerialised form before the draft offer document is filed. |
| Partly Paid-up Shares | Ensure all existing partly paid-up equity shares are either made fully paid-up or are forfeited before proceeding. |
| Project Finance | Arrange firm financing for at least 75% of the stated project cost (excluding funds to be raised from the IPO itself). |
| Use of Proceeds | The amount for ‘general corporate purposes’ cannot exceed 25% of the amount being raised. The combined amount for ‘general corporate purposes’ and funds for unidentified acquisitions cannot exceed 35% of the issue size, with the latter itself capped at 25%. |
1.4. The Cornerstone Document: The Draft Red Herring Prospectus (DRHP)
The DRHP is the most critical disclosure document in the IPO process. It provides potential investors with all the material information needed to make an informed decision. The process, governed by Regulations 24, 25, and 26, involves three key steps:
Drafting and Due Diligence: The DRHP is prepared containing all material disclosures, ensuring the information is true and adequate. The Lead Manager(s) are legally required to exercise due diligence to verify all information presented in the document and shall submit due diligence certificate to SEBI
Due Diligence Certificates are required to be issued at the following times during an IPO to SEBI:
With the Pre-filed Draft Offer Document
After SEBI Observations
Before filing with the Registrar of Companies
In the event of Material Developments
Filing with SEBI: The issuer files the DRHP with SEBI and the relevant stock exchanges. SEBI reviews the document and may issue observations or request clarifications, typically within 30 days.
Public Comment Period: Upon filing, the DRHP is made available to the public on the websites of SEBI, the issuer, and the Lead Manager(s) for a period of at least 21 days to invite comments.
1.5. Promoters’ Contribution and Share Lock-in
To ensure that an issuer’s promoters have “skin in the game” and are committed to its long-term success post-listing, SEBI mandates a minimum contribution and subjects their shares to lock-in periods. This is an important governance mechanism aligns promoter interests with those of new shareholders, prevents premature exits that could destabilize the share price, and builds market confidence.
Minimum Promoters’ Contribution
As per Regulation 14, the promoters must hold at least 20% of the issuer’s post-issue capital. This contribution demonstrates their continued confidence and alignment with new shareholders.
Lock-in Periods
To prevent promoters and early investors from selling their shares immediately after listing, their holdings are subject to a mandatory lock-in period, as detailed in Regulations 16 and 17.
- Promoters’ Minimum Contribution (20%): Locked-in for 18 months from the date of IPO allotment. However, if the majority of the fresh issue proceeds are for capital expenditure, this lock-in period is extended to three years.
- Promoters’ Holding Above the Minimum: Any shares held by promoters beyond the 20% minimum are locked-in for 6 months from the date of IPO allotment. Similarly, if the majority of the fresh issue proceeds are for capital expenditure, this lock-in period is extended to one year.
- Pre-IPO Shareholders (Non-Promoters): The entire pre-issue capital held by shareholders other than the promoters is locked-in for 6 months from the date of IPO allotment.
2. The During-IPO Phase: Navigating the Launch
Once the DRHP is cleared by SEBI and the Red Herring Prospectus (RHP) is filed, the IPO goes live. This phase involves setting the price, opening the issue to the public, and managing the application process.
2.1. Pricing of an IPO :
According to Regulation 29, an IPO price can be determined through a ‘fixed price’ method or, ‘book building’ process. For a book-built issue, the issuer sets a price band instead of a single price. This band must adhere to specific rules:
- The issuer must announce a floor price or a price band at least two working days before the issue opens.
- The cap of the price band must be at least 105% of the floor price but no more than 120% of the floor price, effectively creating a maximum 15% spread from the floor.
2.2. The Public Offer Period
The live IPO period is governed by strict timelines and rules to ensure a fair and transparent process for all investors.
- Issue Duration (Regulation 46): The IPO must remain open for subscription for a minimum of 3 working days and a maximum of 10 working days.
- Application Process (Regulation 35): All applications from investors must be made using the Application Supported by Blocked Amount (ASBA) facility, where the application money is blocked in the investor’s bank account instead of being transferred.
- Minimum Application Value (Regulation 47): The minimum application value for an investor must be set within the range of ₹10,000 to ₹15,000.
- Allocation Structure (Regulation 32): In a standard book-built issue (under the Profitability Route), the net offer is allocated as follows:
- Qualified Institutional Buyers (QIBs): Not more than 50%.
- Non-Institutional Investors (NIIs): Not less than 15%.
- Retail Individual Investors (RIIs): Not less than 35%.
- (Note: This structure differs significantly from the QIB Route, where the allocation is mandated to be at least 75% for QIBs and not more than 10% for RIIs.)
- Minimum Subscription (Regulation 45): The issue is considered successful only if it receives a minimum subscription of 90% of the offer size. If this threshold is not met, all application money must be refunded within four days from the closure of the issue.
3. The Post-IPO Phase: Life as a Listed Company
The work doesn’t end when the subscription window closes. The post-IPO phase involves the important tasks of allotment, listing, and transitioning into the continuous compliance framework of a public company meaning at the time of IPO issuer entity has to follow ICDR and after listing Entity must be in compliance with SEBI (LODR) Regulations 2015 also.
3.1. The Grand Finale: Allotment and Listing
Following the closure of the issue, the post-issue process (Regulations 49 and 50) unfolds quickly:
1. The basis of allotment is finalized in a fair and transparent manner in coordination with the designated stock exchange.
2. The issuer ensures that shares are credited to the dematerialised (demat) accounts of successful allottees. Simultaneously, the blocked application money for unsuccessful or partially successful applicants is unblocked or refunded within the strict timelines mandated by SEBI through its circulars.
3. Any failure to allot shares or refund/unblock money within the stipulated time requires the issuer to pay interest at a rate of 15% per annum for the period of delay.
3.2. Communication and Accountability
Transparency and accountability are paramount for a newly listed company. Key post-listing compliance requirements include:
- Post-Issue Advertisement (Regulation 51): Within 10 days of completing the allotment process, the issuer must publish an advertisement in national and regional newspapers. This ad provides details on subscription levels, the basis of allotment, and key dates for refunds and listing.
- Use of Proceeds Monitoring (Regulation 41): If the issue size, excluding the size of the offer for sale by selling shareholders, exceeds ₹100 crore, the issuer must appoint a SEBI-registered credit rating agency to monitor the utilization of the IPO proceeds. This agency submits a quarterly report to the issuer, which must be disclosed to the stock exchanges, until 100% of the proceeds are utilized.
3.3. Activities /Steps to be done for an IPO for easy reference :
Pre-IPO Phase :
| Sequence | Key Milestone / Activity | Regulatory Reference |
| Step 1 | Eligibility Assessment & Clean-up | |
| Check against “Red Flags” (Reg 5) (e.g., debarred promoters, willful defaulters). | SEBI (ICDR) Reg 5 | |
| Determine Eligibility Route: Profitability Route (Reg 6(1)) OR QIB Route (Reg 6(2)). | SEBI (ICDR) Reg 6 | |
| Ensure Promoters’ contribution (min 20%) is ready to be locked in. | Reg 14, 16, 17 | |
| Step 2 | Assembling the “A-Team” | |
| Appoint Lead Manager(s), Registrar, Bankers, Compliance Officer. Lead Managers conduct due diligence on other intermediaries. | Reg 23 | |
| Step 3 | Critical Corporate Compliances | |
| Obtain in-principle approval from Stock Exchanges. | Reg 7 | |
| Dematerialize promoter holdings. | Reg 7 | |
| Ensure partly paid-up shares are fully paid or forfeited. | Reg 7 | |
| Arrange firm project finance (75% of stated cost). | Reg 7 | |
| Step 4 | Drafting & Due Diligence | |
| Lead Manager drafts the Draft Red Herring Prospectus (DRHP) and submits due diligence certificate to SEBI. | Reg 24, 25, 26 | |
| Step 5 | SEBI Filing & Public Review | |
| File DRHP with SEBI and Stock Exchanges. | ||
| Concurrent Activity A: Public Comment Period opens (hosted on websites). | Minimum 21 Days | |
| Concurrent Activity B: SEBI review process and issuance of observations. | Typically ~30 Days | |
| Step 6 | Finalizing the Offer Document | |
| Incorporate SEBI observations into the document. File the final Red Herring Prospectus (RHP) with the Registrar of Companies (ROC). |
DURING IPO :
| Timing Definition | Activity | Regulatory Reference |
| T Minus 2 Days | Price Band Announcement | |
| (Before Issue Opens) | Issuer announces the Floor Price or Price Band (Cap max 120% of floor). | Reg 29 |
| T = Day 0 | ISSUE OPENS | |
| The IPO goes live for public subscription. | ||
| T + 3 to T + 10 Days | Public Offer Period | |
| Investors submit applications via ASBA (amount blocked in bank). Minimum application ₹10k-₹15k. | Reg 35, 46, 47 | |
| Issue Closing Day | ISSUE CLOSES | |
| Subscription window closes. | Reg 46 | |
| Immediately After Close | Minimum Subscription Check | |
| Verify if 90% subscription is met. If NOT, refund process begins within 4 days. | Reg 45 |
POST -IPO :
| Sequence | Key Milestone / Activity | Regulatory Reference |
| Step 1 | Finalizing Allotment | |
| Basis of allotment finalized with Designated Stock Exchange. | Reg 49, 50 | |
| Allocation check based on route (Profitability vs. QIB route requirements for QIB/NII/RII). | Reg 32 | |
| Step 2 | Crediting & Unblocking | |
| Shares credited to successful allottees’ demat accounts. | Reg 49, 50 | |
| Funds unblocked/refunded for unsuccessful applicants (strict timelines apply; 15% interest penalty for delay). | ||
| Step 3 | THE GRAND FINALE: LISTING | |
| Trading commences on the Stock Exchanges. Company is now “Public.” | ||
| Step 4 | Post-Issue Advertisement | |
| Publish details of subscription, allotment basis, etc., in newspapers. | Reg 51 (within 10 days of allotment) | |
| Step 5 | Continuous Compliance | |
| Transition to compliance with SEBI (LODR) Regulations 2015. | ||
| Use of Proceeds Monitoring: If issue >₹100 Cr, Credit Rating Agency monitors funds quarterly until fully utilized. | Reg 41 |
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