SEBI weighs third-party checks on IPO fund use

SEBI Chairman Tuhin Kanta Pandey said the capital markets regulator is preparing a framework for third-party monitoring agencies to verify whether funds raised through initial public offerings are used for the purposes disclosed in offer documents. He made the comments during a panel discussion at NDTV Profit in Mumbai on 29 Oct 2026.

The proposed oversight would add an independent verification layer between IPO proceeds and their stated uses, covering areas such as project spending, expansion plans and other disclosures made to investors. The framework is still being prepared, and the article did not provide a timeline, agency structure or compliance cost for issuers.

Third-party IPO monitoring could increase scrutiny of listed companies after fundraising and make deviations from offer documents more visible. For the financial-services sector 💼, the measure would affect companies raising capital as well as merchant bankers, auditors and other intermediaries involved in the issue and post-listing process.

Pandey also said that some listed companies with little or no economic activity function like shell companies and “add risk to the market”. His comments place inactive or weakly operating listed entities within the regulator’s broader focus on market integrity and investor protection ⚖️.

Key points:

- A monitoring agency would verify the use of IPO proceeds against the purposes disclosed in offer documents.

- SEBI identified shell-like listed companies with little or no economic activity as a source of market risk.

- No implementation date, monitoring methodology or penalty framework was specified in the reported comments.

The next market-relevant triggers are the formal framework, any consultation paper or circular, and the scope of companies and issues covered. Investors will also watch whether the rules require periodic reporting, independent certification or disclosures on unutilised and diverted funds. These details will determine the compliance burden for future issuers and the level of transparency available after an IPO 📋.

The announcement forms part of SEBI’s wider efforts to strengthen oversight of listed entities and capital raising. Since no listed company was named in the report, the immediate impact is sector-wide rather than company-specific.

Source: Cityairnews, 29 Oct 2026

Not investment advice. For informational purposes only.