Why SEBI Returns DRHPs and What Pre-Filing Checks Prevent It
SEBI’s own guidelines require a draft offer document to be written in active voice. The requirement sits at clause 1.1(i)(c) of Annexure A to circular SEBI/HO/CFD/PoD-1/P/CIR/2024/009, dated 6 February 2024, which sets out the grounds on which SEBI can hand a draft back to the issuer and the lead manager.
It sits in the same list as pending litigation and concerns raised by another regulator. On the face of the circular, a sentence written the wrong way round and an unresolved enforcement matter are both reasons a draft can come back.
Annexure A runs to twenty grounds. Fifteen of them are about how the document is written: sentence length, voice, double negatives, headings, repetition between sections, and figures that disagree with each other. Preparation for a filing tends to concentrate on the other five, the ones about what the company has done.
In this guide
What it means when a DRHP is returned by SEBI
The February 2024 circular is titled “Guidelines for returning of draft offer document and its resubmission”. It was issued under Section 11(1) of the SEBI Act and Regulation 299 of the ICDR Regulations, took effect on the day it was issued, and was signed by Yogita Jadhav, General Manager, Corporation Finance Department.
Its defined term is “draft offer document”, which covers both the DRHP and the draft letter of offer (the equivalent document for a rights issue). So the same twenty grounds apply whether you are filing for a public issue or a rights issue.
When a draft is returned, four things follow from the circular itself:
- There is no fee to resubmit (clause 2.1). Fees payable on updates under Schedule XVI still apply in the normal way.
- If the issuer decides not to resubmit, the original filing fee is not refunded (clause 2.2).
- A public announcement has to be made within two days of resubmission, and it has to say that the document is a resubmitted one (clause 2.3).
- Where the company is regulated by a sectoral regulator, that regulator has to be told in writing (clause 2.4). If the return was on ground 1.4, which covers concerns raised by another regulator or an enforcement agency, the remedial measures with that regulator have to be completed before the draft goes back in.
The announcement obligation is usually the part that stings. The return goes on the record in a form that any counterparty, lender or anchor investor can find later, and it does that at the moment you resubmit rather than when the document first came back. The time cost is a filing cycle, in a market where observation letters can already take months.
The four things that can happen to a draft offer document
A return and a rejection are different instruments with different consequences, and a good deal of the content ranking for these terms treats them as the same event.
| Outcome | Instrument | Capital markets consequence | Refiling |
|---|---|---|---|
| Query or clarification | Regulation 25, ICDR | None, this is the normal course | No refiling. The 30-day observation clock restarts once the reply satisfies SEBI |
| Returned | February 2024 circular | None | Resubmit when ready. No fee. Public announcement within two days |
| Rejected | Framework for Rejection of Draft Offer Documents Order, 2012 | No access to the capital markets for at least a year, extendable depending on how material the issue is | After the bar lapses |
| Withdrawn | The issuer’s own decision | None | At will |
DRHP rejection reasons, and where they actually apply
The 2012 Order is the harsher power. It lets SEBI reject a draft outright and keep the issuer out of the market for a year or more. AZB & Partners have noted that SEBI had already been drifting towards handing documents back rather than invoking that power, and the February 2024 circular put the softer route on a formal footing.
So a return is generally not a milder rejection. It is a different instrument, and it is part of the reason issuers are often quietly allowed to withdraw rather than being formally rejected.
One caution for anyone trying to benchmark this. SEBI’s weekly processing status page carries a single combined label, “Withdrawn/Returned”, and press coverage reproduces it word for word. From public data you usually cannot tell whether the regulator pushed the document back or the issuer pulled it. Any return rate built from news coverage is counting two different events as one, so treat those figures with some care.
Why does SEBI return a DRHP? The twenty grounds in Annexure A
Annexure A to the February 2024 circular lists the grounds in full, with the circular’s own clause numbering. They are reproduced here in the circular’s own terms, grouped by the kind of problem each one describes.
| Clause | Ground | Category |
|---|---|---|
| 1.1(i)(a) | Short sentences | Drafting |
| 1.1(i)(b) | Definite, unambiguous, conventional words | Drafting |
| 1.1(i)(c) | Use of active voice | Drafting |
| 1.1(i)(d) | Tabular presentation or bullet lists where required | Drafting |
| 1.1(i)(e) | Avoidance of multiple negatives | Drafting |
| 1.1(ii)(a) | Clear and concise sections, paragraphs and sentences | Drafting |
| 1.1(ii)(b) | Descriptive headings and subheadings | Drafting |
| 1.1(ii)(c) | Avoidance of legal and technical terminology | Drafting |
| 1.1(ii)(d) | Technical and complex terms clarified in simple terms | Drafting |
| 1.1(iii)(a) | No complex presentation that obscures the substance | Drafting |
| 1.1(iii)(b) | No vague or imprecise explanation open to more than one reading | Drafting |
| 1.1(iii)(c) | No complex material quoted from legal documents without a plain explanation | Drafting |
| 1.1(iii)(d) | No repetition across sections that adds length without adding information | Drafting |
| 1.1(iii)(e) | No inconsistency in numbers, data or facts between sections, or between the draft and later replies to SEBI queries | Consistency |
| 1.1(iv) | Risk factors worded simply and clearly, without undermining the risk | Drafting |
| 1.2(i) | Substantial revision or addenda needed on key disclosures | Substantive |
| 1.2(ii) | Corrective measures needed on account of regulatory interpretation | Substantive |
| 1.3 | Disclosure that cannot be understood without going to the rules | Substantive |
| 1.4 | Another regulator or enforcement agency has expressed a material concern | External |
| 1.5 | Pending litigation bearing on eligibility under Regulations 5, 61, 102, 213 or 228 | External |
Clause 1.3 comes with the circular’s own illustration, which is worth reading closely: a company filing under Regulation 6(2) has to say which of the Regulation 6(1) conditions it fails to meet, rather than simply citing 6(2). The disclosure has to stand on its own for a reader who does not have the regulations open.
The drafting grounds that get less attention
Active voice, short sentences, multiple negatives, undefined legal terminology, the same material restated in three places. Press coverage when the circular came out in February 2024 tended to talk about omissions and inadequate disclosure, which is where the attention usually goes, while a large part of the annexure’s text is about prose.
These are the grounds a drafting team can control completely. They do not depend on the company’s history, its promoters or its litigation. They depend on how the sentences were put together under deadline by several people who were not writing to the same style.
Internal inconsistency, the ground that now spans three documents
Clause 1.1(iii)(e) is the one with the longest reach. It asks for consistency in numbers, data and facts between sections of the draft, and it extends to replies sent to SEBI after filing. A figure in a response letter that contradicts the filed draft is itself a ground for return.
Since the March 2026 amendment it generally reaches further again, because the draft abridged prospectus (the short summary version of the offer document given to investors) is now filed alongside the DRHP. Revenue, headcount, capacity, outlet counts, promoter holding and the rest have to agree across all of it.
This is probably the highest-risk mechanical defect in a 500-page document put together by four workstreams. Think of it the way you would think of a consolidation with four feeder schedules and no tie-out: each part is right on its own terms, and the error only shows when something cross-checks them.
Risk factors written as reassurance
Clause 1.1(iv) asks for risk factors worded simply and clearly, without undermining the risk. In practice the failure is usually promotional phrasing carried over from the pitch deck, where a risk arrives wrapped in what the company is doing about it and the risk itself gets lost. A risk factor that reads as a mitigation statement is not doing the job the clause describes.
What the March 2026 ICDR amendment changed
The SEBI (ICDR) (Amendment) Regulations, 2026, notified in March 2026, make the draft abridged prospectus a required filing alongside the DRHP under Regulation 25. It is published for the 21-day comment period under Regulation 26, and the separate offer document summary has been deleted. SEBI framed the change as making disclosure easier for retail investors to get through.
Reporting around the amendment also indicates that the objects of the issue have to be presented in tabular form, with a cap of roughly 100 words per objective.
The practical effect for a filing team is a second summary document that has to agree with the first. It is usually produced late in the process, often by someone who was not drafting the main document, which is exactly the condition under which clause 1.1(iii)(e) problems appear. Any figure that changes in the DRHP after the summary is drafted has to be chased into the summary as well.
DRHPs SEBI has returned, and what the record does not tell you
| Company | What happened | Reported by |
|---|---|---|
| WOG Technologies | Draft papers withdrawn or returned, 30 October 2026 | Upstox |
| Sunil Gold India | Filed 9 March 2026, withdrawn or returned 14 August 2026 | IPO Central |
| Vishal Mega Mart, Avanse Financial Services | Returned on technical grounds, July 2024 | Moneycontrol |
| Garuda Construction, Jaykay Enterprises, KRN Heat Exchange, Shree Tirupati Balaji Agro, Gretex Broking, Stallion Fluorochemicals | Part of a cluster of more than ten returns in mid-2024 | Moneycontrol |
| Diffusion Engineers | Filed 27 December 2023, returned 7 March 2024 | IIFL |
| Digit Insurance | Returned January 2024 over employee stock appreciation rights, held ineligible | Inc42 |
| OYO (Oravel Stays) | DRHP returned 30 December 2022, refiling advised | Business Standard |
| Lava International | DRHP returned 13 January 2023 | Business Standard |
| NSE | DRHP returned 2019 pending the colocation matter, still unresolved as of 2025 | Business Standard |
SEBI rarely says publicly why a particular draft came back. The reports on Diffusion Engineers and on OYO both note that the regulator gave no elaboration. Where a reason is documented, as with the stock appreciation rights at Digit or the colocation overhang at NSE, it tends to be an eligibility matter rather than a drafting one.
That combination, together with the combined “Withdrawn/Returned” label discussed above, means the drafting grounds cannot really be reverse-engineered from the public record. Watching cases will not tell you which sentences caused a problem. Reading Annexure A and checking the draft against it will.
The DRHP pre-filing checklist
Twenty checks, one for each ground in Annexure A, with the clause each one defends against. Run them on the draft before it goes out, and again on the resubmission if a draft has already come back.
Part 1: language and construction
| # | Check | Clause |
|---|---|---|
| 1 | Passive constructions identified and converted where the actor is known | 1.1(i)(c) |
| 2 | Sentences over roughly 40 words flagged and split | 1.1(i)(a) |
| 3 | Double and triple negatives removed | 1.1(i)(e) |
| 4 | Undefined technical and legal terms either defined or replaced | 1.1(ii)(c), 1.1(ii)(d) |
| 5 | Quoted contract and statute text accompanied by a plain-language explanation | 1.1(iii)(c) |
| 6 | Every section carries a descriptive heading | 1.1(ii)(b) |
| 7 | Dense narrative passages that should be tables or lists converted | 1.1(i)(d) |
Part 2: consistency
| # | Check | Clause |
|---|---|---|
| 8 | Every recurring figure reconciled across all sections: revenue, headcount, capacity, outlet counts, promoter holding, etc. | 1.1(iii)(e) |
| 9 | Figures in the draft abridged prospectus tie back to the DRHP | 1.1(iii)(e) with Regulation 25 as amended in 2026 |
| 10 | Every number in every reply letter to SEBI reconciled back to the filed draft | 1.1(iii)(e) |
| 11 | Near-duplicate passages across sections identified and collapsed | 1.1(iii)(d) |
| 12 | Defined terms used consistently throughout | 1.1(i)(b) |
Part 3: risk factors and disclosure quality
| # | Check | Clause |
|---|---|---|
| 13 | No promotional or self-congratulatory phrasing inside risk factors | 1.1(iv) |
| 14 | Each risk factor states the risk and, where it can be quantified, its size | 1.1(iv) |
| 15 | No risk factor hedged to the point of concealing the risk | 1.1(iv) |
| 16 | Objects of the issue quantified per objective, in tabular form, within the word cap | Schedule VI as amended in 2026 |
Part 4: substantive and external
| # | Check | Clause |
|---|---|---|
| 17 | Any eligibility route taken under Regulation 6(2) spells out which Regulation 6(1) condition is unmet | 1.3 |
| 18 | Every disclosure readable without going to the rules | 1.3 |
| 19 | Sectoral regulator positions confirmed and closed before filing | 1.4 |
| 20 | Litigation bearing on eligibility under Regulations 5, 61, 102, 213 and 228 assessed and disclosed | 1.5 |
Which of these a person can realistically do by hand
Items 1 to 3, 8 to 12 and 16 are mechanical. They can be found by software reading the document, and they are the checks a human reviewer tends to perform worst on a 500-page file assembled by four workstreams against a deadline. Nobody reconciles every instance of a revenue figure across 500 pages by eye, which is roughly why clause 1.1(iii)(e) exists.
Items 17 to 20 need judgement about the company, its regulators and its litigation, and they will continue to. A review tool can tell you that a disclosure cites Regulation 6(2) without naming a condition. It cannot tell you whether the sectoral regulator is going to object.
Items 1 to 3, 8 to 12 and 16 are the checks a reader on a deadline tends to miss across 500 pages, and the ones software can run on every version of the draft. See how Prefyle checks a draft against Annexure A →
What to do if your DRHP is returned
A rough sequence that tends to work:
- Get the specific insufficiency in writing from the SEBI desk handling the file. The circular does not require SEBI to publish a reason, and the coverage of past returns suggests it generally does not elaborate, so the written position from the desk is what you have to work from.
- Fix the defect that was cited, then sweep the whole document for the same class of defect. If one set of figures did not reconcile, the others probably want checking too, and a second return on the same ground is an avoidable one.
- Where the return was on ground 1.4, close out the position with the other regulator first. Clause 2.4 requires the remedial measures to be completed before the draft goes back in.
- Prepare the two-day public announcement and the sectoral regulator intimation before you resubmit, rather than after. Two days is not long once the resubmission goes in.
- Confirm what is payable under Schedule XVI for the updates. Resubmission itself carries no fee, but update fees still apply.
There is no mandated waiting period after a return. Nothing in the circular imposes one. The delay you are managing is operational, which is to say it is made up of drafting time, board and auditor sign-offs, and the queue at SEBI’s end, rather than a bar on refiling.
Common questions
Why would SEBI return a DRHP?
Annexure A to the February 2024 circular lists twenty grounds. Fifteen are about how the document is written, covering sentence construction, voice, terminology, repetition and figures that do not agree between sections. The remaining five cover substantive disclosure gaps, regulatory interpretation, other regulators’ concerns and eligibility-related litigation.
What is the difference between a DRHP being returned and rejected?
A return happens under the February 2024 circular and carries no bar on refiling. You resubmit when the document is ready, with no fee, and make a public announcement within two days. A rejection under the 2012 Order keeps the issuer out of the capital markets for at least a year.
Does a returned DRHP mean the IPO is cancelled?
No. The issuer can resubmit the same draft once it has been corrected, and there is no fee for doing so. What is usually lost is time, generally a filing cycle, and the original filing fee is not refunded if the company decides not to go back in.
Is there a cooling-off period after a DRHP is returned?
There is no waiting period after a return. The circular imposes an announcement obligation and a sectoral regulator intimation, not a bar on refiling. A cooling-off applies after a rejection under the 2012 Order, which is a different instrument.
Does SEBI say why it returned a DRHP?
Rarely in public. Reports on returns such as Diffusion Engineers and OYO note that no reason was given, and SEBI’s processing status page uses a combined “Withdrawn/Returned” label. The specific insufficiency usually has to be obtained from the SEBI desk handling the file.
Can a DRHP really be returned over language or passive voice?
On the text of the circular, yes. Clause 1.1(i)(c) of Annexure A lists use of active voice among the grounds, alongside short sentences, avoidance of multiple negatives and avoidance of legal terminology. Those sit in the same annexure as litigation and regulator concerns.
A return is a document quality problem before it is anything else, and document quality is one of the few inputs a lead manager controls from end to end. By the time a draft is being assembled you cannot change what sits in the company’s litigation history. You can change whether the figures in one section agree with the figures in the summary.
It works a bit like a set of accounts going out without a tie-out. Every schedule can be right on its own, and the file still comes back because nothing was checked against the others. Reading Annexure A clause by clause and running the draft against it before filing is the cheaper end of that work.
