SEBI brings in stricter disclosure norms for IPO-bound companies
SEBI has introduced stricter Key Performance Indicator (KPI) disclosures for initial public offers (IPOs) to be announced by Indian companies. These new standards, developed in collaboration with industry associations (The Associated Chambers of Commerce and Industry of India (ASSOCHAM), Federation of Indian Chambers of Commerce and Industry (FICCI) & Confederation of Indian Industry (CII)), aim to enhance transparency and provide investors with a clearer understanding of a company’s valuation and business performance. The guidelines, issued by the Industry Standards Forum, mandate unambiguous definitions of KPIs, inclusion of non-traditional financial metrics relevant to valuation, and enhanced oversight by the audit committee and board of directors. Effective April 1, 2025, investment bankers and issuer companies must comply with these standards, ensuring proper disclosure of KPIs in draft and final offer documents.
KPIs are critical for investors to evaluate a company’s performance, assess risks, and compare with other industry peers. The new standards exclude business-sensitive data, unverifiable information, and projections to ensure only relevant and reliable metrics are disclosed. Under the guidelines, KPIs identified or certified by the issuer company’s management must be approved by its audit committee before inclusion in the offer document. Companies will also need to disclose “operational measures” — non-financial data points that provide insights into valuation and business models. These metrics must be included in the “basis for offer price” section of the offer document.
