Key TakeawayAn analysis of SEBI observations raised on DRHPs filed in Q1 2026, with a focus on related-party disclosure gaps, promoter restated financials and material litigation representations.
Q1 2026 saw 23 DRHPs filed with SEBI, of which 17 received formal observations within the standard 30-day window. APRA's IPO advisory team has reviewed the observation letters (available publicly on SEBI's website) across a representative sample, and three categories of issues are emerging with higher-than-usual frequency.
Related-party transaction disclosures: SEBI is asking companies to disclose not just the quantum and nature of RPTs in the three restated years, but to explain the commercial rationale for each significant transaction and confirm that it was on arm's-length terms with the basis for that conclusion. Companies that have had significant promoter-entity transactions — particularly inter-company loans, property transactions and brand licence arrangements — should expect detailed questions.
Promoter restated financials: Where promoters or promoter entities are being listed for the first time (as part of the offering structure), SEBI is requiring restated financials for the promoter entity in a format consistent with Ind AS, even if the promoter entity previously filed under Companies Act Schedule III alone. This is a significant additional audit workload that many companies are not planning for.
Material litigation disclosures: The SEBI desk is specifically asking for quantification of contingent liabilities in cases where companies have disclosed 'material litigation' but provided only qualitative descriptions. For companies with pending tax demands — GST, income tax, or customs — the DRHP should include the demand amount, the stage of proceedings, the company's assessment of the likely outcome, and the provision (if any) made in the financial statements. Vague disclosures are being sent back.
What this means for your business
This briefing is based on current regulatory positions as of 14 April 2026. Laws and regulatory positions change frequently. Before acting on any information in this publication, we strongly recommend consulting with a qualified partner who can assess your specific facts and circumstances. Contact our IPO Advisory team at info@aprafirm.com or 0124-4477824/825.