“Objects of the Offer” refers to the specific purposes for which a company plans to utilise the funds it raises through a public offering, including an initial public offer (“IPO”). A company undertaking an IPO (the “Issuer Company”) is mandated to precisely disclose these purposes so that investors understand how their capital will be deployed in the future. These details are set out in various iterations of the offer document, namely: the pre-filed draft red herring prospectuses (“PDRHP”), the updated draft red herring prospectuses I and II (“UDRHPs”) in the case of confidential filing routes, and the draft red herring prospectuses (“DRHP”) and UDRHP in the case of normal filing routes, along with draft abridged prospectuses, abridged prospectuses, red herring prospectuses (“RHP”), and prospectuses filed subsequently in both routes (hereinafter collectively referred to as “Offer Documents”).
A dedicated section in the Offer Documents titled “Objects of the Offer” outlines the amount proposed to be raised through the offer (“Proceeds”), and discloses how the issuer company intends to utilise the net proceeds. It identifies the specific purposes or goals, referred to as the ‘objects’, for which funds are being raised. Importantly, these stated objects must be consistent with and must not contradict the objects set out in the Issuer Company’s memorandum of association (“MOA”). This requirement is rooted in the ultra vires doctrine, under which a company may act only within the scope of the objects set out in its constitutional documents. In this regard, Section 4(1)(c) of the Companies Act, 2013, (the “Act”) requires that the MOA of a company state “the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof.” Accordingly, the objects disclosed in the Offer Documents cannot extend beyond, or be inconsistent with, the objects authorised under the MOA.
Considering that an issuer company discloses the “Objects of the Offer” at multiple stages of the offering process across various Offer Documents, a natural question arises: can these objects be modified between successive filings, and if so, what limits and compliance requirements apply? This article addresses this question. In practice, the treatment of changes to the objects varies significantly depending on the stage of the offering process. Prior to the opening of the offer, while the company is still filing draft and updated Offer Documents, modifications are generally permitted since these documents are, by design, iterative and subject to regulatory review. However, the position becomes materially stricter once the prospectus, which is a final offer document, is issued and the company raises funds based on the disclosed objects. At that stage, the objects acquire quasi-contractual character with Section 27 of the Act, establishing the governing principle.
This two-part article examines the limitations and compliance requirements relating to variations in objects of an issuer company. While the first part focuses on the position prior to listing, the second part discusses the regulatory framework and considerations applicable once the company is listed.
At the pre-offer stage, the regulatory framework follows a structured, threshold-based approach that guides how changes to the “Objects of the Offer” are to be treated. Particularly, the thresholds differ depending on whether the issuer company is following the normal filing route (governed by Schedule XVI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (“SEBI ICDR”)), or the confidential/pre-filed route (governed by Schedule XVI-A of the SEBI ICDR). The overarching principle remains that more significant deviations attract stricter compliance and regulatory scrutiny.
(i) Changes which require fresh filing of the draft offer document or pre-filed draft offer document with the regulators, along with fees:
In cases where changes are substantial, the issuer company is required to undertake a filing of the fresh DRHP in case of a normal filing route, and an updated PDRHP in case of a confidential filing route where UDRHP-I was already filed, which results in effectively restarting the regulatory review process. Under the normal filing route (Schedule XVI of the SEBI ICDR), this requirement is triggered where:
- there is any addition to the objects resulting in an increase in the offer size or means of finance by more than 20 percent. To understand with an illustration, suppose a company initially plans to raise ₹500 crore to set up a manufacturing plant. Later, it decides to add a new object, i.e., acquiring another company, which requires an additional ₹150 crore. This pushes the total offer size to ₹650 crore, which is a 30 percent increase. Since the increase exceeds 20 percent, a fresh DRHP or PDRHP, as applicable, would be required to be filed with the regulators.
- deletion of an object leads to a decrease in the offer size by more than 20 percent, particularly where such deletion may exacerbate risk. To give an example, imagine the company originally plans to use ₹400 crore for plant expansion and ₹100 crore for debt repayment (which totals to ₹500 crore). However, if it deletes the debt repayment object, the offer size drops to ₹400 crore, which is a reduction of more than 20 percent. If this raises concerns about the company’s leverage or financial stability, it may be seen as exacerbating risk, triggering a fresh filing requirement.
- there is an increase in allocation towards any object by more than 20 percent. For instance, suppose one of the objects was devised to allocate ₹200 crore for working capital out of a total offer of ₹500 crore. If the company revises this to ₹260 crore, which will be a 30 percent increase in allocation to that object, then even if the total offer size remains unchanged, this shift will cross the 20 percent threshold and require a fresh filing.
Nevertheless, it is pertinent to note that SEBI, in light of the prevailing market uncertainty and subdued investor participation which has arisen from geopolitical implications in the Middle East, has pursuant to a recent communication dated April 13, 2026, addressed to the Association of Investment Bankers of India (AIBI), provided temporary relief from the fresh filing requirement. This relief is applicable in cases of additions to the objects resulting in an increase in the offer size or means of finance by more than 20 percent. In this case, SEBI has increased the threshold of 20 percent and permitted issuer companies, on a case-to-case basis, to vary the fresh issue size by up to 50 percent without undertaking a fresh filing of the DRHP or PDRHP, as applicable. However, this relaxation is available for IPOs opening before September 30, 2026, provided there is no change in the main objects of the offer, the lead manager confirms compliance of the draft Offer Document with Regulation 7(1)(e) of the SEBI ICDR, and the revised disclosures are reflected through the filing of an addendum to the DRHP.
Additionally, Schedule XVI-A of the SEBI ICDR is applicable on the confidential filing route which is still at the PDRHP stage, and while the framework is similar, certain thresholds are higher, which triggers the filing of fresh PDRHP in case of variation in objects:
addition to objects resulting in an increase in offer size or means of finance by more than 50 percent;
deletion of an object causing a decrease in offer size by more than 50 percent; and
any increase in estimated deployment towards an object by more than 20 percent.
The reason behind the higher thresholds prescribed by the legislature in general and the regulator in particular under Schedule XVI-A under the confidential route, as compared to the normal route of filing, as per our analysis, is due to the fact that at a conceptual level, the confidential route operates at a stage where the Offer Documents are not yet in the public domain at PDRHP stage and investor reliance has not crystallised. Unlike the normal route, where the DRHP is publicly available and begins to shape investor perception, the PDRHP is primarily subject to regulatory scrutiny and internal iteration, and only becomes public at UDRHP-I stage. As there is no widespread investor reliance at this stage, the law can afford to tolerate greater variability in the objects of the offer without immediately triggering onerous refiling requirements.
(ii) Changes which require filing of the updated Offer Document with the regulators:
Where the changes are moderate and falling below the fresh filing thresholds but still material enough to warrant regulatory attention, the issuer company may proceed by filing an updated Offer Document in case of the normal route, or PDRHP in case of the confidential route, as per Schedules XVI and XVI-A, respectively. The aforesaid will be triggered in case of any addition or deletion to the objects resulting in a change in the estimated offer size or means of finance by more than 10 percent but not exceeding 20 percent requires the filing of an updated offer document. In such cases, the issuer company may proceed with the offer only after receiving confirmation from SEBI.
About the authors: Kshitij Asthana is a Managing Associate and Ashutosh Anand is an Associate at Luthra and Luthra Law Offices India.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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