Draft Red Herring Prospectus (DRHP) has to be approved by the relevant stock exchange of India NSE Emerge or BSE SME for SME IPO. After approval of DRHP, UDRHP (Updated DRHP) and Red Herring Prospectus (RHP) filing is the next step towards listing requirements.

The relevant stock exchange conducts a thorough review of DRHP and the following steps are undertaken to file final prospectus (RHP) with stock exchanges.

• The relevant Exchange assesses the compliance, accuracy, and sufficiency of disclosures made in the DRHP.
• The exchange then provides its observations on the content, highlighting areas that may require modifications, clarifications, or additional disclosures.
• Upon receiving the exchange’s observations, the Issuer company is required to respond with justifications on observations received.
• The exchange examines these responses and, upon being satisfied that the Issuer has adequately addressed its concerns, grants its in-principle approval for the DRHP. DRHP approval typically takes 2-3 months for approval.
• Following the exchange's approval, the Issuer company along with Lead Manager(s) must incorporate all required changes specified by the exchange.
• These changes may relate to financial disclosures, risk factors, business strategies, corporate governance, or any other aspect deemed necessary for investor protection and transparency.
• When the exchange is satisfied with comments on all its observations, the company proceeds to file UDRHP which is a revised document which ensures that all material information is presented in a manner that is clear, concise, and in compliance with applicable regulations.

Once all necessary modifications have been made, the Issuer company proceeds to file the Updated Draft Red Herring Prospectus (UDRHP) with the exchange. This version reflects all the amendments and updates requested by the exchange, ensuring that the prospectus is in full compliance with the applicable regulations. This filing serves as a final confirmation of the Issuer’s commitment to maintaining transparency and regulatory adherence. UDRHP approval typically takes two-three weeks by the Exchange.

The IPO merchant banker then submits final Prospectus, RHP (Red Herring Prospectus), a due diligence certificate as per Form A of Schedule V, along with additional confirmations as outlined in Form G of Schedule V to SEBI and to the ROC. These documents affirm that the Issuer has complied with all regulatory requirements and that the disclosures made in the offer document are accurate and sufficient. This due diligence process ensures that potential investors receive reliable and verified information before making investment decisions.

As per the regulatory requirements, the RHP is displayed on the websites of the Issuer company, the Securities and Exchange Board of India (SEBI), the lead manager(s), and the SME exchange(s). This ensures transparency and provides investors with easy access to crucial information about the IPO.

The transformation from DRHP to RHP is a structured and meticulous process designed to safeguard investor interests and maintain market integrity. By undergoing rigorous scrutiny and incorporating necessary revisions, the issuer company ensures that its offer document aligns with regulatory standards, thereby facilitating a smooth and compliant IPO launch.

After the filing of RHP, marketing and advertising activities begins which can be understood in the next chapter.