Main Board IPO

25th Oct, 2025| 5 Min read.

MAIN BOARD IPO – DETAILED PROCESS & REQUIREMENTS

 

1. INTRODUCTION

A Main Board IPO (Initial Public Offering) is the process by which a large and established company offers its shares to the public for the first time and lists them on the Main Board of a recognized stock exchange (like NSE or BSE in India)

The Main Board is meant for companies with strong financials, proven track records, and larger market capitalization compared to SME or startup platforms.

 

2. ELIGIBILITY CRITERIA

A. Basic Corporate Requirements

1. The issuer must be a public limited company under the Companies Act, 2013.
2. The company must have a track record of profitability and net worth.
3. The company must not be a wilful defaulter, blacklisted, or involved in any SEBI investigation.
4. The articles of association should permit public issue of shares.
5. The company must follow corporate governance standards as per SEBI (LODR) Regulations, 2015.

 

B. Financial Criteria (As per SEBI/Exchange Norms)

Parameter	Minimum Requirement
Net Tangible Assets	₹3 crore in each of the preceding 3 full years.
Net Worth	₹1 crore in each of the preceding 3 full years.
Operating Profit	Positive in at least 3 out of the last 5 years.
Paid-up Equity Capital (Post-Issue)	At least ₹10 crore.
Distributable Public Shareholding	Minimum 25% of post-issue capital to be offered to the public.
Promoter’s Contribution	Minimum 20% of post-issue capital, locked in for 3 years.
No Defaults	No defaults in repayment of loans/debentures.

If a company does not meet these requirements, it can consider an SME IPO or direct listing through alternate routes.

 

C. Other Eligibility Conditions

• The company’s name should not resemble any existing listed company.
• The company must have fully paid-up shares (no partly paid shares).
• Promoters and directors should have clean track records (no pending SEBI or RBI cases).
• The company should have at least 1,000 prospective investors willing to participate.

 

3. STAKEHOLDERS INVOLVED IN AN IPO

Stakeholder	Role & Responsibility
Merchant Banker (Lead Manager)	Designs IPO structure, conducts due diligence, prepares documents, coordinates with SEBI and stock exchanges.
Legal Advisor	Conducts legal due diligence, reviews material contracts, drafts offer documents.
Statutory Auditor	Provides audited financial statements and certifications.
Registrar to the Issue (RTI)	Handles investor applications, allotments, refunds.
Underwriter	Guarantees minimum subscription.
Bankers to the Issue	Manage collection of application money.
Advertising / PR Agencies	Handle marketing, branding, and investor roadshows.
Compliance Officer	Ensures all statutory and disclosure requirements are met.

 

4. DETAILED IPO PROCESS (STEP-BY-STEP)

 

STEP 1: Corporate Decision & Internal Preparation

• Board passes a resolution approving the IPO plan.
• Shareholders approve the public issue and any increase in authorized capital.
• Company converts to public limited company (if private earlier).
• Appointment of intermediaries (merchant banker, legal advisor, registrar, etc.).

Documents:

• Board Resolution
• Shareholders’ Resolution
• Engagement Letters with Intermediaries

STEP 2: Due Diligence & Drafting

A. Financial Due Diligence

• Verification of last 3–5 years’ financial statements.
• Check for contingent liabilities, related party transactions, and compliance.

B. Legal Due Diligence

• Verify property titles, intellectual property, litigation, corporate records, and statutory approvals.

C. Drafting Key Documents

• Draft Red Herring Prospectus (DRHP) prepared jointly by the company and lead manager.
• Contains: business details, management info, risk factors, financial data, objects of the issue, etc.

 

STEP 3: Filing with SEBI and Stock Exchanges

• DRHP is filed with SEBI and the stock exchanges (NSE/BSE).
• SEBI reviews the DRHP and issues observations/comments (typically within 30 days).
• The company responds to comments and updates the document.

Output:

• Final Red Herring Prospectus (RHP) after incorporating SEBI’s feedback.

 

STEP 4: Marketing and Investor Outreach

• Conduct roadshows and presentations to institutional and retail investors.
• Media campaigns to create investor awareness.
• The goal: generate investor interest and gauge demand.

 

STEP 5: Pricing & Book-Building

There are two pricing methods:

1. Fixed Price Issue

• Price determined before issue opens.

2. Book-Building Issue (common method)

• Price band set (e.g., ₹350–₹370 per share).
• Investors bid for quantity and price within band.
• Final price discovered based on bids (cut-off price).

Investor Categories:

• QIBs (Qualified Institutional Buyers): 50% reservation.
• Non-Institutional Investors (HNIs): 15%.
• Retail Individual Investors (RIIs): 35%.

 

STEP 6: Allotment and Refund

• Issue closes → bids analyzed → shares allotted based on demand.
• Oversubscription handled via proportionate allotment.
• Unsuccessful bidders get refunds via bank accounts.
• Shares credited to investors’ Demat accounts.

 

STEP 7: Listing and Trading

• Company files listing application with exchanges.
• Stock exchanges verify compliance and grant trading approval.
• Shares start trading on the Main Board (BSE/NSE).

Listing Ceremony: Often a public event marking the company’s entry into the market.

 

STEP 8: Post-IPO Compliance

After listing, the company must adhere to continuous listing obligations, including:

Requirement	Frequency
Financial Results	Quarterly & Annually
Board Meetings	Minimum 4 per year
Shareholding Pattern	Quarterly Disclosure
Corporate Governance Report	Quarterly
Related Party Transactions	Ongoing Disclosure
Insider Trading Regulations	Continuous
Minimum Public Shareholding	25% always

Non-compliance can result in fines, suspension, or delisting.

 

5. DOCUMENTATION REQUIRED

Category	Document	Description
Corporate Approvals	Board & Shareholder Resolutions	To approve IPO, issue of shares, and appointment of intermediaries.
Financial Documents	Audited Financials (3–5 years)	As per Ind-AS, certified by statutory auditor.
Offer Documents	DRHP, RHP, Prospectus	Disclosure documents submitted to SEBI and public.
Legal Documents	Due Diligence Report, Material Contracts, Licenses, Property Titles	Proof of legal and business legitimacy.
Certificates	Due Diligence Certificate (by Lead Manager)	Confirms verification of all disclosures.
Agreements	Between Company and Intermediaries	Merchant Banker, Registrar, Bankers to Issue, etc.

 

6. TYPICAL TIMELINE

Phase	Duration
Internal Preparation & Due Diligence	1–2 months
DRHP Drafting & Filing	1 month
SEBI Review & Observations	1–2 months
Roadshows & Marketing	2–3 weeks
Issue Open & Close	3–5 days
Allotment, Refunds, Listing	~2 weeks
Total Process Duration	6–9 months (average)

 

7. KEY BENEFITS OF MAIN BOARD IPO

• Access to large-scale capital for expansion or debt reduction.
• Enhances brand visibility and corporate image.
• Enables liquidity for promoters and early investors.
• Provides valuation benchmark for M&A and employee stock options.
• Strengthens governance and transparency.

 *BizzXchage providing the services of Main board and SME IPO service*

8. CHALLENGES & RISKS

• High regulatory scrutiny and disclosure requirements.
• Significant cost (merchant banker fees, legal, compliance, etc.).
• Market volatility can affect subscription and pricing.
• Ongoing compliance burden post-listing.
• Possible dilution of promoter control.