Enhancements to Capital Markets Disclosure Requirements: A Comprehensive Overview

Raising the Bar: SEBI’s New Disclosure Rules Aim to Build Trust in Indian Capital Markets

In a bid to bring more clarity and accountability to India’s capital markets, the Securities and Exchange Board of India (SEBI) has introduced a set of sweeping changes to how companies disclose key information ahead of public listings and capital raises. These reforms are aimed squarely at improving transparency and helping investors better assess the financial and operational health of companies—especially those in the fast-evolving tech and digital sectors.

At the heart of SEBI’s move is a deeper focus on Key Performance Indicators (KPIs)—and a stronger framework for making them meaningful, consistent, and verifiable.

What’s Changing—And Why It Matters

For companies heading to the public markets, SEBI’s revised rules will mean greater scrutiny not just of financial figures, but also of the underlying drivers of their business models.

Here are the most significant shifts:

1. Looking Further Back: Three-Year Transaction History Now Required

Previously, companies preparing for an IPO were only required to disclose share transactions and fundraising activity from the past 18 months. That window is now extended to three years.

This broader time frame will include:

All past equity sales and security issuances
Any fundraisings via private placements or rights issues
Transactions involving promoters and promoter groups

Why this matters: Investors will now get a clearer picture of a company’s capital history and whether insiders have been consistently backing the business—or cashing out ahead of the listing.

2. KPIs That Go Beyond the Balance Sheet

SEBI is making it mandatory for companies to present a fuller story—not just financials, but also the operational metrics that reflect the health and momentum of the business.

This includes measures like:

Active user base or subscriber growth
Customer churn rate
Unit economics such as cost per user or per product
Other sector-specific indicators

The goal? To encourage businesses, particularly in digital-first industries, to tie performance to fundamentals, not just flashy narratives.

3. New Industry-Wide Standards for KPI Disclosure

From April 1, 2025, companies will be required to follow a far more structured regime for KPI disclosure in offer documents.

KPIs will be categorised under:

GAAP Metrics – Like revenue, profit, and EBITDA
Non-GAAP Metrics – Such as adjusted EBITDA or customer acquisition costs
Operational Indicators – Unique to each sector but central to business performance

Importantly, companies must:

Clearly define each KPI
Explain how and why it is relevant
Benchmark their KPIs against at least three comparable peers—preferably listed Indian companies or, if unavailable, global players

This is a big step toward bringing consistency and comparability to investor documents—something that’s been sorely lacking in new-age IPOs in particular.

4. Audit Committee Oversight and Third-Party Certification

SEBI’s new framework also adds stronger checks and balances around KPI disclosure:

The company’s audit committee must review and approve all disclosed KPIs, including the rationale behind why certain measures were chosen (or excluded).
KPIs must be certified by a qualified professional—a Chartered Accountant or Cost Accountant who holds a peer review certificate.
This ensures the data presented isn’t just marketing—it’s grounded in verifiable, auditable information.

5. Post-IPO Transparency: It Doesn’t End on Listing Day

Even after going public, companies will now be required to:

Continue disclosing KPIs at least once a year
Maintain disclosures until the entire IPO proceeds are fully utilised, or for at least one year post-listing—whichever is later
Obtain ongoing audit committee and board approval

This addresses concerns that investor visibility often drops off after the IPO buzz fades.

What Prompted This Overhaul?

SEBI has been collecting and studying KPI disclosures since it first introduced guidelines in 2021. After three years, patterns emerged:

Too many companies used vague, undefined, or non-standard KPIs
Peer comparisons were rare
Audit committee oversight was inconsistent

Now, with more data and experience, SEBI is moving to tighten the rules and raise the standard—bringing India closer to global norms around capital market disclosures.

The Bigger Picture: Why This Matters to Investors

At a time when retail and institutional investors alike are scrutinising growth stories more closely, these reforms aim to shift the focus from speculative hype to sustainable performance.

SEBI’s new rules will:

Give investors a longer, clearer view of capital flows and promoter activity
Improve cross-company comparability, especially within fast-changing sectors like tech, fintech, and consumer platforms
Force companies to explain and justify the numbers they use to market themselves

Final Word

These changes are not just technical tweaks—they’re part of a larger cultural shift in India’s equity markets. One where disclosures are clearer, accountability is higher, and investor protection is front and centre.

As SEBI continues to shape a more transparent and mature capital market, these enhanced disclosure norms are likely to set a new benchmark for how Indian companies prepare to go public—and how they remain accountable long after the IPO glow fades.