IPO – Filing Documents and Red Herring Prospectus

The investment bank prepares a registration statement to be filed with the regulator (SEC in US and SEBI in India). This registration document contains the management related information, the current promoters’ holdings structure, financial statements of the firm, legal issues related information, if any and the purpose of IPO.

This document must be signed off for further proceedings. The regulator takes some time, which is called as ‘cooling off period’, to verify accuracy of the information provided in the registration document. Since the company will become public limited (from privately held) and the regulator has to look after the interests of investors, there are strict rules in place to get the required approval. During the cooling off period the merchant bank prepares the ‘Red Herring prospectus’.  The main purpose of Red herring prospectus is to attract potential investors by giving complete information like performance of the company, future growth potential of the firm, senior management profile etc. The investment bank meets potential investors and gathers their views on the timing of the issue and the best price to get the issue subscribed fully.

Please take a look at any one of the document available at SEBI official website for more details of the documentation.
(Go to Home > Offer Documents  > Public Issues: Draft Offer Documents filed with SEBI)

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December 21, 2008 | Filed Under Stocks 

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