Description

SEBI imposes penalties on Accretion Pharmaceuticals Limited and Jawa Capital Services Private Limited for making undisclosed forward-looking projections during investors' meet and failure of BRLM to exercise due diligence.

Summary

SEBI’s Adjudication Officer issued an order (Order/AK/RK/2025-26/31951-31952) against Accretion Pharmaceuticals Limited (Issuer) and Jawa Capital Services Private Limited (BRLM) for violations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and SEBI (Merchant Bankers) Regulations, 1992. The violations occurred when the issuer’s management made forward-looking revenue projections for FY 2025-26, 2026-27, and 2027-28 during an investors’ meet held one day before the issue opening, which were not disclosed in the DRHP or RHP. The BRLM failed to exercise due diligence and independent professional judgment despite being present at the investors’ meet.

Key Points

  • Show Cause Notice issued on October 28, 2025 (Ref. No. SEBI/HO/EAD/EAD1/P/OW/2025/00027452/1)
  • Adjudicating Officer appointed on October 03, 2025 under Section 15-I(1) of SEBI Act, 1992
  • Accretion Pharmaceuticals Limited (PAN: AAZCA7550K) alleged to have made undisclosed forward-looking projections during investors’ meet
  • Jawa Capital Services Private Limited (PAN: AABCI4476N) as BRLM failed to ensure adequate disclosure and due diligence
  • Projected future revenues for three financial years disclosed verbally but not in offering documents
  • Noticees responded to SCN on November 24, 2025, claiming projections were in response to investor queries
  • Proceedings conducted under Section 15HB of SEBI Act for penalty determination

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions of:

  • SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018
  • SEBI (Merchant Bankers) Regulations, 1992
  • Emphasizes requirement that all material information and forward-looking statements shared with investors must be disclosed in offering documents
  • Reinforces BRLM’s obligation to exercise due diligence and ensure complete disclosure

Compliance Requirements

  • Issuers must ensure all forward-looking projections and material information shared during investor meets, roadshows, or any public communication are disclosed in DRHP/RHP
  • Merchant Bankers/BRLMs must exercise independent professional judgment and due diligence over all investor communications by issuer management
  • BRLMs must ensure investors receive true and adequate information without misleading or exaggerated claims
  • All participants in IPO process must maintain consistency between oral presentations and written disclosure documents
  • Investment bankers must actively monitor and control information flow during pre-IPO investor interactions

Important Dates

  • October 03, 2025: Adjudicating Officer appointed
  • October 28, 2025: Show Cause Notice issued
  • November 24, 2025: Noticees submitted replies to SCN
  • Date of investors’ meet: One day before issue opening (specific date not mentioned in excerpt)

Impact Assessment

Market Impact: Medium - This enforcement action reinforces disclosure standards for IPO processes and sets precedent for controlling information flow during investor interactions. Affects practices of issuers and merchant bankers in managing pre-IPO communications.

Regulatory Impact: High - Strengthens SEBI’s oversight of IPO disclosure practices and merchant banker conduct. Clarifies that verbal communications during investor meets are subject to same disclosure standards as written documents.

Operational Impact: Medium - Issuers and merchant bankers must implement stricter controls over investor presentations, ensuring alignment with offering documents. May require pre-approval processes for all investor meeting materials and management presentations.

Investor Protection: High - Ensures retail and institutional investors receive complete and consistent information across all communication channels during IPO process, preventing information asymmetry between different investor groups.

Impact Justification

Enforcement action against issuer and merchant banker for disclosure violations during IPO process. Sets precedent for investor meet disclosures but impact limited to specific entities.