SEBI To Create A 'Demystifying' IPO Document, Will Have AI-Based Processing

SEBI Chairperson Madhabi Puri Buch announced the creation of a demystified initial public offering document during her speech at the Annual Capital Markets Conference organised by the Federation of Indian Chambers of Commerce and Industry on Friday.

The new document aims to simplify the IPO process by requiring applicants to fill in specified blanks. For any conditions or exceptions, a separate column will be provided for the applicant to give clear explanations.

"The document will be precise, using no complex language," Buch said, emphasising the need to counter the confusion often associated with IPO-related issues.

Buch also addressed the mechanism for the return of IPO approval documents by the Securities and Exchange Board of India. This system was introduced to prevent system blockages from problematic applications. She clarified common misunderstandings among market participants, noting that some have misinterpreted the return of documents as minor issues, such as differences in active versus passive voice.

However, the actual reasons for document returns are significant regulatory concerns, such as a director under investigation for fraud affecting the approval process.

Buch also disclosed the markets regulator’s plans to implement artificial intelligence-based processing for IPO approvals. This innovation is expected to streamline the normal track so efficiently that a faster track will no longer be necessary.

Buch highlighted the importance of capital formation in the capital market. India leads globally in the total number of IPOs and issuances and ranks third from a jurisdictional perspective. The country is at the top in terms of growth rate, she said.