When issuers approach their first GIFT City listing, the DRHP is usually treated as a familiar exercise. The headings look known, the sequencing resembles an Indian IPO prospectus, and advisers often begin by adapting existing SEBI-era templates. That comfort lasts until the first IFSCA comment letter arrives. What surprises most issuers is not the intensity of scrutiny but its direction. Sections that would pass unquestioned in an Indian IPO are interrogated line by line, while areas traditionally considered peripheral suddenly become decisive. The gap is not one of compliance; it is one of drafting philosophy.
A GIFT City DRHP is not designed for a retail market where regulatory standardisation and post-listing investor protection do the heavy lifting. It is designed for an offshore institutional market where disclosure quality substitutes for protection, and enforceability matters more than form. The International Financial Services Centres Authority reads the DRHP less like a statutory filing and more like a risk memorandum. Every clause is evaluated on a single test: does this disclosure allow an offshore investor to price risk without assumption or inference?
This article sets out a detailed, clause-by-clause explanation of the structure of a GIFT City DRHP, written from the perspective of someone who drafts, revises, and defends these documents before the regulator. It explains why each section exists, how IFSCA reads it, how different sections interact with each other, and where issuers and advisers routinely underestimate regulatory expectations. This discussion builds on the regulatory context explained in Regulatory Architecture Governing Listings in GIFT City: How the IFSCA Framework Is Structured, the conceptual differences analysed in What Is a DRHP for GIFT City Listings and How Is It Different from an Indian IPO DRHP?, and the eligibility lens discussed in Eligibility Criteria for Listing Securities in GIFT City (IFSC): A Practitioner’s Perspective. Read together, these pieces explain not only what the DRHP contains, but how the IFSC documentation ecosystem works as a whole.
What is a DRHP for a GIFT City listing?
A Draft Red Herring Prospectus for a GIFT City listing is the primary disclosure document filed with the International Financial Services Centres Authority for listing securities on an IFSC-recognised exchange, structured to enable offshore investors to assess regulatory, jurisdictional, operational, and enforcement risk without reliance on domestic public-issue protections.
This definition is not semantic. It drives drafting decisions across the document. In an Indian IPO, the DRHP operates within a dense ecosystem of prescriptive regulation, standard formats, and retail safeguards. In the IFSC, the regulator assumes a sophisticated investor base and places the burden squarely on disclosure. The DRHP must therefore explain the transaction as it truly is, not as it would like to be perceived.
The structural logic of a GIFT City DRHP
Although the headings of a GIFT City DRHP may resemble those of an Indian IPO prospectus, the internal logic is different. The document is not meant to be read sequentially by a lay investor. It is read iteratively by regulators, exchanges, legal counsel, and institutional investors. Statements made in one section are immediately tested against others. A sentence in the business overview is weighed against financial disclosures. A claim in the offer summary is reconciled with risk factors and use of proceeds. Inconsistency is treated as a disclosure failure, not a drafting oversight.
As a result, the DRHP must function as a single, coherent narrative answering three recurring questions. First, who is the issuer, where does it operate, and under which legal regimes does it exist? Second, what risks materially affect the security, particularly in a cross-border and offshore context? Third, does the issuer’s governance, capital structure, and use of funds justify investor trust in an international financial centre? Every clause must advance one or more of these answers.
Cover Page: Establishing jurisdictional identity
In a GIFT City DRHP, the cover page is not a branding exercise. It is the document’s jurisdictional anchor. It tells the regulator and the market, at a glance, which legal systems are engaged and which are not. A well-drafted cover page clearly identifies the issuer’s place of incorporation, its principal jurisdictions of operation, and the nature of the securities being offered. It specifies the currency of issue, the currency of settlement, and the IFSC-recognised exchange on which listing is proposed.
Disclaimers on the cover page carry substantive weight. Statements clarifying that the securities are not being offered to the public in India, that SEBI regulations do not apply, and that investor protections differ from domestic markets are not boilerplate. They frame the risk environment in which the entire document must be read. Indian issuers sometimes try to soften this language out of concern for optics. That instinct is misplaced. In the IFSC context, clarity builds confidence. Ambiguity invites scrutiny.
Offer Summary: A regulatory consistency check
The offer summary in a GIFT City DRHP is not intended to persuade; it is intended to align. IFSCA uses this section as an internal cross-reference tool. If the offer summary presents a cleaner, more optimistic picture than the detailed disclosures that follow, comments are inevitable. The regulator’s concern is not tone but selectivity.
The safest drafting approach is to prepare the offer summary after the entire document has stabilised. It should accurately reflect the issuer’s business, the nature of the securities, the key risks, and the intended use of proceeds. Growth narratives must be balanced with risk disclosures. Jurisdictional and regulatory dependencies disclosed later in the document must not be diluted here. The offer summary is expected to mirror the document, not curate it.
Risk Factors: The core analytical section
Risk factors are the analytical core of a GIFT City DRHP. Unlike Indian IPOs, where risk factors often serve as defensive disclosures to mitigate liability, IFSC risk factors serve as affirmative pricing inputs. The regulator reads them from the perspective of an offshore institutional investor: if this risk materialises, what happens, who bears the impact, and is the risk adequately disclosed?
Effective risk factor sections in IFSC DRHPs are structured, layered, and prioritised. They usually begin with risks inherent to the IFSC framework itself, including regulatory evolution, enforcement mechanisms, and settlement infrastructure. They then move into jurisdictional risks, such as reliance on Indian operations, exposure to FEMA restrictions, currency controls, tax uncertainty, and enforceability of judgments across borders. Only after this foundation is laid do issuer-specific operational risks appear, followed by instrument-specific risks relating to the securities being offered.
What often triggers regulator comments is not missing risk disclosure, but misclassification. Treating a FEMA dependency as a generic operational risk suggests a failure to appreciate its impact on investor exit and cash-flow mobility. Burying enforcement or repatriation risks deep in the section undermines transparency. In IFSC drafting, hierarchy is as important as content.
Definitions and Abbreviations: Controlling the legal universe
Definitions in a GIFT City DRHP are not cosmetic. They define the legal universe within which the document operates. Terms such as “Applicable Law”, “Regulatory Authority”, “Material Subsidiary”, and “Group Companies” determine which laws are acknowledged, which regulators are engaged, and which entities are relevant.
Indian IPO templates often define these terms broadly, assuming a single regulatory ecosystem. In an IFSC context, that assumption can be dangerous. Including Indian securities laws within “Applicable Law” without qualification may imply regulatory overlap that does not exist. Excluding Indian law altogether, where Indian operations or cash flows are material, may raise under-disclosure concerns. The drafting challenge is precision.
Best practice is to finalise definitions at the end of the drafting process, once the narrative has stabilised. This ensures that defined terms reflect actual usage rather than theoretical coverage and reduces the risk of internal inconsistency.
Industry Overview: Providing context without promotion
IFSCA permits industry discussion, but it expects restraint. The purpose of the industry overview is to contextualise the issuer’s business and risks, not to promote the sector. Overly optimistic narratives unsupported by independent data attract scepticism. Overly generic descriptions add little value.
Indian issuers frequently rely on domestic market statistics without explaining offshore relevance. Foreign issuers sometimes ignore Indian linkages despite material operations. Both approaches are problematic. The industry overview should be concise, data-anchored, and explicitly linked to the issuer’s revenue streams, geographic exposure, and regulatory environment.
Business Overview: The first integrity test
The business overview is often where inconsistencies first surface. IFSCA reviewers read this section alongside financial statements, risk factors, and use of proceeds. If the business overview emphasises diversification while the financials show revenue concentration, the discrepancy is flagged. If the narrative promises expansion without corresponding funding or regulatory permissions, questions follow.
This section should describe the business as it exists at the time of filing. Future plans should be disclosed only where they are directly funded by the issue or are otherwise material to investor assessment. Over-ambitious storytelling is counterproductive in an offshore disclosure document.
Regulatory and Legal Framework: Materiality-driven drafting
The regulatory and legal framework section is where IFSC DRHPs diverge most sharply from Indian IPO practice. In the IFSC, issuers operate at the intersection of multiple legal regimes: IFSCA regulations, exchange bye-laws, home-jurisdiction company law, sector-specific foreign regulations, and, for Indian issuers, FEMA and exchange-control rules.
The challenge is not comprehensiveness, but relevance. IFSCA does not expect a treatise on every applicable law. It expects clarity on which regulations materially affect investor rights, issuer obligations, and enforcement. Over-disclosure obscures risk by overwhelming the reader. Under-disclosure undermines confidence. The drafting judgment lies in identifying the regulatory touchpoints that matter most to an offshore investor.
Capital Structure: Evaluating coherence and credibility
Capital structure disclosures in a GIFT City DRHP are not mere tables. They are credibility assessments. The regulator examines whether the capital structure is coherent in light of the issuer’s jurisdiction, tax positioning, regulatory permissions, and investor expectations. Hybrid instruments, layered holding structures, and promoter-controlled vehicles receive particular attention.
Ambiguity around voting rights, economic rights, conversion mechanics, or exit options almost always leads to detailed clarification requests. Many capital structure issues are, in substance, eligibility issues expressed through disclosure. This is why capital structure drafting must be informed by the eligibility principles discussed in Eligibility Criteria for Listing Securities in GIFT City (IFSC): A Practitioner’s Perspective.
Terms of the Issue: Drafting for enforceability
The terms of the issue section is read through an enforcement lens. Pricing mechanisms, currency denomination, settlement processes, lock-ins, conversion rights, and redemption features must be drafted with precision. Language that might be tolerated in a domestic context is not acceptable in an offshore market.
For debt and hybrid instruments, IFSCA pays close attention to yield determination, events of default, ranking, subordination, governing law, and dispute resolution. This section often attracts multiple rounds of comments because it sits at the intersection of legal drafting and financial engineering.
Use of Proceeds: Traceability over discretion
In a GIFT City DRHP, flexibility is not a virtue in use-of-proceeds disclosure. The regulator expects proceeds to be traceable to identifiable business objectives. Generic references to “general corporate purposes” are acceptable only as a residual category, not as a primary allocation.
For Indian issuers, additional scrutiny applies where proceeds may be deployed onshore. FEMA permissibility, routing mechanisms, and end-use restrictions must be disclosed clearly and consistently with business strategy and risk factors. Any disconnect here raises concerns about regulatory compliance and investor transparency.
Financial Information: Consistency as the benchmark
Financial disclosures in a GIFT City DRHP are judged less by format and more by internal consistency. IFSCA focuses on whether accounting policies are stable, restatements are clearly explained, and pro-forma adjustments are conservative and justified.
Foreign issuers must ensure reconciliation to internationally accepted standards is intelligible to offshore investors. Indian issuers must explain domestic accounting nuances without assuming familiarity. Any disconnect between financial disclosures and narrative sections is quickly flagged.
Management and Governance: Building institutional trust
Governance disclosures carry disproportionate weight in IFSC reviews. IFSCA places strong emphasis on board composition, independence, conflict-management mechanisms, and promoter influence. For Indian promoters operating through offshore vehicles, governance is often the regulator’s primary comfort lever.
Related-party transactions are assessed qualitatively. Repetitive promoter-centric arrangements without robust governance justification invite deeper scrutiny, regardless of their financial materiality.
Legal Proceedings and Material Contracts: Investor-impact assessment
Materiality in IFSC litigation disclosure is not purely financial. Proceedings that may appear immaterial in monetary terms can still be material from an enforceability, reputational, or regulatory standpoint. The drafting judgment lies in explaining why a proceeding matters—or does not—rather than simply listing cases.
Material contracts should be disclosed for investor impact, not compliance completeness. Over-listing dilutes significance; under-listing raises transparency concerns.
Statutory and Other Information: The final integrity audit
The statutory and other information section is where regulators test the document’s integrity. Capital history, shareholding patterns, approvals, and filings must align perfectly with earlier disclosures. Minor discrepancies here often trigger broader document reviews, because they suggest systemic drafting weaknesses rather than isolated errors.
Closing Insight
A GIFT City DRHP is not an Indian IPO prospectus with offshore seasoning. It is a standalone disclosure instrument designed for an international financial centre. IFSCA reads it as a narrative of risk, enforceability, and trust. Drafted like a checklist, it struggles. Drafted like a pricing and risk document, grounded in jurisdictional reality, it earns regulatory confidence and investor credibility.
About the Author
Prashant Kumar is a Company Secretary and Partner at Eclectic Legal, with deep experience in drafting and finalising DRHPs, Information Memoranda, and institutional offer documents for GIFT City (IFSC) listings. He regularly advises issuers, lead managers, and legal teams on IFSCA reviews, disclosure structuring, and cross-border regulatory alignment.
Contact: +91-9821008011 | prashant@eclecticlegal.com
FAQs
1. How is a GIFT City DRHP fundamentally different from an Indian IPO DRHP?
A GIFT City DRHP is conceptually different from an Indian IPO DRHP because it is drafted for an offshore, institutional investor base under the supervision of the International Financial Services Centres Authority, not for domestic retail investors under SEBI. Indian IPO DRHPs are prescriptive and format-driven, with heavy reliance on statutory schedules and post-listing investor protection mechanisms. In contrast, a GIFT City DRHP is principle-based and disclosure-centric.
The emphasis shifts from procedural compliance to risk articulation, enforceability, and jurisdictional clarity. Risk factors are expected to drive pricing rather than merely limit liability. Capital structure, FEMA exposure, governance controls, and use of proceeds are examined through an offshore investor lens. Re-using Indian IPO drafting language without recalibration is a common cause of regulator comments, because disclosures that are acceptable in a domestic context often understate offshore regulatory and enforcement risks.
2. What sections of a GIFT City DRHP attract the highest level of IFSCA scrutiny?
In practice, IFSCA scrutiny is most intense around risk factors, regulatory and legal framework disclosures, capital structure, use of proceeds, and governance. These sections directly affect an offshore investor’s ability to price risk and assess enforceability.
Risk factors are examined for prioritisation and classification—jurisdictional and FEMA-linked risks are expected to be elevated, not buried under generic business risks. The regulatory framework section is tested for materiality rather than volume; descriptive summaries without investor impact often draw comments. Capital structure disclosures are scrutinised to ensure clarity on rights, ranking, and exit mechanics. Use of proceeds is examined for traceability and regulatory permissibility, especially where funds may move onshore. Governance disclosures are assessed as a proxy for institutional credibility, particularly for Indian promoter-led structures.
3. How does IFSCA assess materiality in a GIFT City DRHP?
Materiality in a GIFT City DRHP is assessed qualitatively, not mechanically. Unlike Indian IPOs—where financial thresholds often dominate—IFSCA focuses on whether a disclosure affects investor decision-making, risk pricing, or enforceability, even if the immediate monetary impact appears limited.
For example, a litigation with low financial exposure may still be material if it affects regulatory licences, cross-border enforceability, or promoter credibility. Similarly, a FEMA dependency or tax uncertainty may be material even without immediate cash-flow impact. IFSCA expects issuers to explain why a matter is or is not material, rather than relying on numerical thresholds alone. Drafting that merely lists information without analytical context is frequently questioned during review.
4. Why do FEMA and cross-border disclosures become central in GIFT City DRHPs?
FEMA and cross-border disclosures are central because they directly affect capital mobility, dividend flows, investor exit, and enforcement certainty—all core concerns for offshore investors. In a GIFT City listing, IFSCA expects clarity on whether funds can move freely between IFSC entities and India, under what permissions, and with what regulatory risk.
Disclosures must address routing of issue proceeds, downstream investments, repatriation mechanics, pricing compliance, and regulatory approvals. Treating FEMA exposure as a generic operational risk is a common drafting mistake. IFSCA expects these risks to be articulated clearly, prioritised appropriately, and cross-referenced across risk factors, use of proceeds, and regulatory framework sections. Weak FEMA disclosure is often interpreted as weak transaction readiness rather than a drafting lapse.
5. What drafting mistakes most often lead to prolonged IFSCA review cycles?
The most common cause of prolonged IFSCA reviews is template-driven drafting. Issuers and advisers often adapt Indian IPO language without recalibrating it for an offshore, institutional context. This results in selective offer summaries, misclassified risk factors, vague capital structure explanations, and generic use-of-proceeds disclosures.
Another frequent issue is internal inconsistency—statements in the business overview that are not supported by financials, or regulatory claims that are not reflected in risk disclosures. Over-disclosure is also a problem; encyclopaedic regulatory sections often obscure material constraints instead of clarifying them. Finally, governance disclosures that underplay promoter influence or related-party exposure attract deeper scrutiny. IFSCA reviews tend to be efficient when the DRHP reads as a coherent risk narrative rather than a stitched-together compliance document.
