Definition
Monitoring Agency (IPO)
A monitoring agency is an independent body, often a credit rating agency or bank, appointed to track how an IPO's proceeds are spent against the stated objects.
SEBI requires the appointment of a monitoring agency where the fresh-issue size crosses a threshold (₹100 crore). The agency reviews utilisation of the proceeds and submits reports to the audit committee, which are placed before the board and disclosed to the exchanges.
The goal is to prevent diversion of public money to purposes other than those disclosed in the prospectus. Any material deviation must be explained, adding a layer of accountability to how IPO capital is used.
Related terms
- Fresh IssueA fresh issue is the part of an IPO where the company creates and sells new shares, raising capital that goes onto its balance sheet.
- Objects of the IssueThe objects of the issue are the stated purposes for which a company will use the money raised in the fresh-issue portion of an IPO.
- Audit CommitteeThe audit committee is a board sub-committee that oversees financial reporting, internal controls, audits and related-party transactions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.