A company planning a public issue must put several years of financial information into the form the offer document requires, and have it reported on by an accountant. This work is carried out alongside the merchant banker and the legal advisers.
This describes the subject in general terms and is not advice; what applies depends on the facts, and the law changes.
Understanding the service
A public issue in India is governed by the Companies Act, 2013 and by SEBI's regulations on the issue of capital and disclosure requirements. The offer document must contain restated financial information for the prescribed periods, reported on by the accountant, and a number of statements and certificates besides.
Restatement is substantial work. Financial information for earlier years is recast onto consistent accounting policies and the framework applicable for the offer, with the adjustments disclosed.
The scope, the periods, the format and who may issue the report are set by the regulations in force at the time, and SEBI amends them regularly. The requirements must be confirmed for each transaction.
No adviser can guarantee that an issue will proceed, be approved or be subscribed. Those outcomes depend on the regulator, the market and the company.
When it becomes relevant
- A company considering a public issue and assessing what its accounts will need
- An issuer already working with a merchant banker on an offer document
- A company whose historical accounts need restating onto a consistent basis
- A listed company with continuing reporting obligations
What the work may cover, subject to the regulations in force
- Restatement of financial information for the periods the regulations require
- The accountant's report on restated financial information for inclusion in the offer document
- Statements and certificates called for during the issue process
- Review of accounting policies, related-party disclosures and prior-period items
- Assistance in responding to queries raised during the process
Framework and sources
The law and professional standards this work is carried out under. Links open the official site.
How the work runs
- Scope the requirementEstablish the periods, the framework and the reports the current regulations require.
- Gap reviewIdentify where existing accounts differ from what the offer document needs.
- RestateRecast the financial information and document the adjustments.
- ReportIssue the accountant's report and the certificates required.
- Support the processRespond to queries from the issue team and the regulator through the company.
A general sequence. Engagements differ, and the scope of each is agreed in writing.
Common questions
How many years of financial information are required?
The number of periods and the form of presentation are prescribed by the SEBI regulations in force. They are confirmed for each transaction rather than assumed.
Can the statutory auditor do this work?
Who may issue each report depends on the regulations, the eligibility conditions and independence requirements applicable to the transaction.
Does this guarantee the IPO will succeed?
No. Whether an issue proceeds depends on regulatory clearance, market conditions and the company's own decisions.