Authored by Lakshmi Narasimhan Srikrishna
1. SEBI had conducted an examination to assess possible violations of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”) and the SEBI (Merchant Bankers) Regulations, 1992 (“MB Regulations”) in relation to Accretion Pharmaceuticals Limited (being the “Issuer Company” in its IPO) and Jawa Capital Services Private Limited (being the “Book Running Lead Manager” or “BRLM” to the said IPO) (collectively referred to as the “Noticees”). The examination arose from disclosures made during an investors’ meet held one day prior to the opening of the IPO, where the Issuer Company’s management discussed projected future revenues that were not included in the offer documents filed by the Issuer Company with SEBI and the Stock Exchanges as part of the IPO.
2. Consequent to its examination, SEBI issued a show cause notice seeking the response of the Issuer Company and the BRLM on why adjudication under Section 15HB of the SEBI Act, 1992 should not be initiated against them.
Alleged Violations
3. As part of its proposed adjudication, SEBI alleged violations of:
(a) Regulation 263 read with Schedule IX of the ICDR Regulations (public communications restrictions) – with respect to the Issuer Company; and
(b) Regulation 13 read with Schedule III of the Merchant Bankers Regulations (code of conduct obligations) – with respect to the BRLM.
4. The alleged violations were based on certain forward-looking revenue projections (pertaining to FY 2025-26, 2026-27 and 2027-28) which were made by the management of the Issuer Company during an investors’ meet one day prior to the date of the opening of the IPO.
It was alleged that these statements made by the management were:
(a) not disclosed in the DRHP or RHP filed by the Issuer Company as part of the process; and
(b) constituted ‘public communication’ under the ICDR Regulations.
6. Therefore, SEBI asserted that:
(a) The Issuer Company had violated restrictions imposed on it and its representatives with respect to public communications under the ICDR Regulations which requires that public communications are to contain information already included in the offer documents; and
(b) the BRLM failed to exercise due diligence and did not clarify or caution investors not to rely on such projections after the management of the Issuer Company had made the statements which fell short of the duties of the Book Running Lead Manager with respect to due diligence and investor protection under the MB Regulations.
Submissions Made in response to the Show Cause Notice
7. The Issuer Company and the BRLM contended that:
(a) the statements made at the investors’ meet were mere projections which were disclosed only in response to a specific investor query and not as part of any presentation or publicity material. It was also emphasized that such statements were aligned with internal financial expectations and actual performance trends;
(b) the presentation made by the management at the investors’ meet contained a “safe harbour” slide which clarified that the presentation was not a prospectus or offer document and that forward-looking statements involved uncertainties;
(c) the statements made by the management of the Issuer Company contained figures which were based on data submitted earlier to NSE as part of the listing approval processes and were also supported by auditors’ certification; and
(d) that the actions were bona fide, i.e., without an intent to mislead investors.
Issues Considered by SEBI
8. The Adjudicating Officer framed the following issues for consideration:
(a) Whether the Noticees violated the provisions cited under the show cause notice pertaining to the ICDR Regulations and the MB Regulations?
(b) Whether such violations, if established, attracted monetary penalty under Section 15HB of the SEBI Act?
(c) If so, what should be the appropriate quantum of penalty, having regard to the factors under Section 15J of the SEBI Act?
SEBI’s Findings
9. In its order dated 7th January 2026 (“Order”), SEBI: (i) rejected the contentions of the Noticees; and (ii) levied a penalty of Rs. 1,00,000/- on each of the Noticees under Section 15HB of the SEBI Act 1992 on the basis of the following:
(a) The investors’ meet at which the statements were made by the management of the Issuer Company qualified as public communication under the ICDR Regulations;
(b) As per the provisions of the ICDR Regulations, public communications may only contain information disclosed in the offer document, and issuer companies cannot release undisclosed material information during conferences or interactions which were not previously formally disclosed as part of the offer documentation;
(c) The statements regarding revenue projections were admittedly not present in the DRHP/RHP filed by the Issuer Company and no evidence to the contrary had been provided by either of the Noticees;
(d) Making public, any non-public information which was not previously disclosed as part of the offer documentation (DRHP/ RHP) could not be justified simply because such act was only in way of a response to queries raised by investors; and
(e) The presence of the “safe harbour” disclaimer could not be deemed to cure the violation of making such non-public statements, as investors could still assume that such projections formed part of the offer-document disclosures.
10. In its order, SEBI also emphasized that fact that selective dissemination of information which did not form a part of the formal offer documentation process could result in certain investors being at an informational advantage which would in turn undermine market fairness.
11. SEBI also justified the quantum of the penalty levied on the Noticees by noting that: (i) there was neither any quantifiable disproportionate gain by any of the Noticees nor could any investor loss be demonstrated; and (ii) the Noticees had no prior violations. Despite the above, SEBI observed that once contravention of statutory obligations is established as part of the adjudication proceedings, penalty follows as a matter of law, relying on the precedent of the Supreme Court in the matter of SEBI vs. Shriram Mutual Fund [2006] 5 SCC 361.
Key Takeaway from the Order
12. The Order reinforces SEBI’s position that disclosure discipline during public issues is non-negotiable and that even well-intentioned statements made in interactive forums may attract enforcement if they deviate from offer-document disclosures. It also demonstrates that both issuer companies and market intermediaries share responsibility for maintaining informational parity and protecting investor confidence.
