(Vvanshika Singhal and Daksh Jain are 4th-year students at National Law University Odisha)
Introduction
On 13 November 2025, the Securities and Exchange Board of India (‘SEBI’) released a Consultation paper (‘Consultation Paper’) proposing important amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (‘ICDR Regulations’). These amendments are supposed to enhance the ease of doing business to the issuer companies and to increase the participation and understanding of the retail investors in the public issues. Rather than conducting a comprehensive reform of the ICDR framework, SEBI has suggested specific amendments that aim at eliminating the long-standing operational issues and harmonizing the regulatory framework with the current market practices.
The ICDR framework has since its inception regulated the disclosure requirements of issuers, the standard of investor protection, and the procedural requirements governing public offerings. Nonetheless, as the markets are becoming more dynamic and more digitalized, some of the provisions that were in place, especially those that concerned the lock-in of pledged pre-issue shares and the applicability of an abridged prospectus, have not kept up. Stakeholder feedback has repeatedly highlighted the practical difficulties issuers face during the IPO process, as well as the ineffectiveness of the bulky disclosure documents as a means of enabling informed retail participation. This changing situation has created a compelling need to have a more streamlined and modernized approach.
The author critically analyses the proposals by SEBI to introduce an enabling mechanism of locking in pledged shares and to substitute the abridged prospectus with a focused Offer Document Summary in this article. Although these proposals are presented as a way to streamline the processes and enhance the transparency, they have subtle implications towards the issuers, investors, lenders, and market intermediaries. This analysis determines whether the proposed changes represent a sufficient balance of operational convenience, regulatory clarity, and investor protection and whether they will make a significant contribution to the stated aim of SEBI to build a stronger ecosystem of public issues.
Fixing the IPO bottleneck: SEBI’s Move to Streamline Locked-in Shares
The lock-in of pre-issue capital has traditionally been instrumental in the preservation of confidence in the IPO process as it provides stability of the issuer’s shareholding before listing. Under the current ICDR model, all the pre-issue capital of the non-promoter shareholders should must remain locked-in for six months from the date of allotment. Nonetheless, there have arisen practical issues in which such shares are pledged, in which depositories currently do not have ability to apply lock-in on pledged securities. The proposal by SEBI aims at resolving this by proposing an enabling mechanism by amendments to the Articles of Association, compulsory disclosures in offer documents, notifications to lenders, system-level updates that enable depositories to designate pledged shares as non-transferable during the required lock-in period.
The proposed mechanism has a number of benefits to issuers and market participants. SEBI eliminates a procedural bottleneck that has been a source of delay and uncertainty in the IPO timelines by developing a standardized way of locking-in pledged shares. The framework ensures that the regulatory purpose of pre-issue lock-in is maintained, regardless of whether shares are pledged or invoked, which increases the integrity of the capital structure of the issuer. It also enhances more transparency to lenders and pledgees as it requires the clear notifications and disclosure, which helps maintain alignment among all stakeholders. To the broader market, this reform can enhance the confidence of the investors, as there will be uniformity in adherence in the pre-listing period.
Nevertheless, the proposal presents significant concerns regardless of its advantages. Amending of the Articles of Association and liaison with various lenders may add more administrative burden to issuers that are planning an IPO. Further, where lenders are not keen on accepting the lock-in on invoked shares, issuers might encounter obstacles in the negotiation process which, ironically, may slow down the process that the amendment is aimed at streamlining. Moreover, compelling lock-in on pledged securities can have an impact on the flexibility of lenders, as well as decrease the attractiveness of unlisted shares as security. There is also the possibility that the operational cost of implementation will be disproportionately borne by smaller issuers with limited resources. These aspects indicate the necessity of a close calibration to ensure that the solution does not unintentionally introduce new layers of difficulty
From Lengthy to Lean: SEBI’s New Offer Document Summary Framework
The second significant proposal by SEBI is the relevance of the Abridged Prospectus in the process of conducting a public issue. Although the ICDR Regulations mandate comprehensive disclosures in the Draft Red Herring Prospectus (DRHP) and Red Herring Prospectus (RHP), the Abridged Prospectus was added as a simplified version to be used with every IPO application, which is supposed to assist retail investors to navigate the necessary information. SEBI, however, has noted that the offer documents have become very long and complicated and the retail investors are often discouraged to read them. In addition, the dependence of retail investors on unverified secondary sources, e.g. grey market trends or social media commentary, highlights the ineffectiveness of current disclosure formats. In this regard, SEBI proposes that instead of the Abridged Prospectus, a more focused and standardised Offer Document Summary would be provided and submitted together with draft and final offer documents and made available online on various platforms, including the issuer, SEBI, stock exchanges, and lead managers.
The introduction of the Offer Document Summary offers several meaningful advantages. By consolidating only the most essential and relevant disclosures, such as risk factors, financial highlights, major litigations, key performance indicators, and promoter details, the summary aims to significantly enhance the accessibility of information for retail investors. The standardised and concise format may also help investors make more informed comparisons across IPOs. Importantly, hosting the summary online across various platforms strengthens transparency and reduces information asymmetry. From the perspective of issuers and intermediaries, the removal of the Abridged Prospectus reduces duplication, streamlines documentation requirements, and aligns disclosure practices with digital-first investor behaviour. Overall, the proposal reflects SEBI’s intent to modernise the IPO disclosure ecosystem in a manner that is conducive to investor engagement.
However, the proposal also presents certain limitations that merit closer consideration. A highly summarised document may inadvertently oversimplify complex issues, potentially causing investors to miss material nuances that would have been available in the Abridged Prospectus. Exclusive reliance on digital access through QR codes and hyperlinks may disadvantage investors who prefer physical disclosure formats or lack reliable internet access. Moreover, ensuring that the Offer Document Summary remains fully aligned with updates to the DRHP/RHP requires rigorous administrative oversight; any inconsistency between the two documents could expose issuers and intermediaries to regulatory scrutiny. There is also a behavioural concern: even with a simplified summary, retail investors may still not engage deeply with disclosures, limiting the extent to which the proposal can achieve its intended objective. These considerations highlight the need for careful implementation to ensure that simplification does not compromise investor protection.
Way Forward and Conclusion
The amendments suggested by SEBI are a valuable effort towards the modernisation of the ICDR framework, yet their success will ultimately rely on the thoughtful implementation and collaboration among the stakeholders. Moving forward, SEBI can consider elaborating operational guidelines, especially in the lock-in of pledged shares to make sure that all depositories, lenders and issuers adopt them uniformly. The availability of clear transition timelines, model Articles of Association clauses and standardised lender-notification forms would help decrease administrative friction to a considerable degree. Simultaneously, SEBI may consider a phased adoption approach, where smaller issuers would be given more time or extra assistance to comply with the new processes, avoiding disproportionate compliance costs.
Regarding the Offer Document Summary, the solution is to find the middle ground between being simplified and detailed. SEBI can look at the possibility of requiring investor-testing or pilot forms to determine whether the summary is actually improving the understanding of retail investors. Digital dissemination must be supplemented with available offline options, ensuring inclusivity across different investor segments. Moreover, the cross-verification of the summary and full offer documents will be essential to ensure accuracy and prevent inconsistency. Supplementary investor-education measures like interactive modules, explainer videos, or simplified risk labels would also assist in addressing the long-standing behavioural dilemma of low disclosure engagement.
Altogether, the proposals of SEBI are a measure of a specific and practical attempt to eliminate the long-run procedural bottlenecks and enhance the quality of investor disclosures. The facilitating process of the locking in of pledged shares can introduce much-needed transparency and predictability into the IPO procedures, should operational challenges and negotiations with lenders be handled with caution. Likewise, substituting the Abridged Prospectus with a focused Offer Document Summary aligns well with the changing behaviour of investors and going digital-first practices, but needs to be supplemented with measures against over-simplification and accessibility. When done accurately and backed by effective stakeholder coordination, these reforms can significantly enhance the efficiency, transparency and investor-centricity of the Indian public issue ecosystem.
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