Toughing norms for public offers, the Securities & Exchange Board of India (SEBI) on Monday announced new guidelines for companies filing for an IPO (initial public offering), and warned that it could turn down those companies' IPO applications would fail to meet new guidelines.

As per new guidelines, SEBI can reject the draft red herring prospectus of any company that will not make its ultimate promoters identifiable. Plus, the promoters' contribution must be in compliance of the regulator's earlier guidelines.

While applying for an IPO, companies will also have to clearly state the purpose for the IPO and not doing so would result into the rejection of the application.

Immediate surge in business just before filing application for the IPO, change in the accounting policy with an intension to show improved prospects, or majority of the business is with the linked parties could also be the grounds for the rejection of the applications.

In addition, SEBI declared that it could reject an IPO "where there exists litigation including regulatory action; which is so major that the issuer's survivor is dependent on the outcome and which is wilfully concealed."

The capital market regulator also declared that an IPO could be withdrawn merely once.

If a company's draft offer documents are rejected by SEBI, it will not be allowed to access the capital market for at least one year.