Sebi likely to tighten monitoring norms for IPO and QIP proceeds

Currently, companies are required to appoint a Sebi-registered monitoring agency (MA) — typically a credit rating agency — if the fresh mop-up exceeds Rs 100 crore. Sebi is now examining whether to lower this threshold to Rs 50 crore or remove it altogether, a move that would expand oversight to a larger universe of fundraisings, particularly by smaller issuers.

The issue was discussed by Sebi’s primary market advisory committee at a meeting held last month, said sources.

An email sent to Sebi remained unanswered until going to press.

The regulator is also looking to overhaul the disclosure framework around monitoring reports. Under the existing structure, monitoring agencies submit their quarterly reports to the company, which is then responsible for filing them with stock exchanges within 45 days of the end of the quarter.

This process has often broken down, with companies delaying submissions or failing to disclose reports altogether, leaving investors with limited visibility on the use of funds.

In some cases, companies have also refused to share data or documents, or even pay monitoring agencies, effectively stalling the oversight process, the sources said.

To address these gaps, Sebi’s expert group has proposed allowing MAs to submit their reports directly to stock exchanges within the stipulated 45-day window, bypassing the issuer. The move is aimed at ensuring timely disclosure and reducing the scope for interference by listed entities.

Separately, the regulator is also considering stricter action against companies that fail to cooperate with monitoring agencies. Under the current framework, a listed company can be fined Rs 50,000 for non-cooperation. If such behaviour persists, Sebi may initiate further regulatory action, sources said.

The reports generated by MAs typically include the status of fund deployment against the stated objects of the issue. The company’s board and senior management are required to provide formal comments on the findings, and the disclosures must be made public on the company’s website and through stock exchanges.

For SME IPOs, the regulator had already lowered the threshold to Rs 50 crore with effect from March 2025.

Recent data suggests the impact on large issuers may be limited. Only three mainboard IPOs last year had a fresh issue size of less than Rs 100 crore. Investment bankers said that of the over 200 IPO filings made during calendar year 2025, there could be a sizable number of firms looking to raise less than Rs 100 crore via fresh issues.

In an IPO, the total issue size may comprise a fresh issue, an offer for sale (OFS), or a combination of both. While OFS proceeds go to selling shareholders, funds raised through a fresh issue accrue to the company and are meant to be deployed for stated purposes such as expansion, debt repayment or working capital.