# Section 32 — Red Herring Prospectus (RHP)
## Why an RHP?
- Helps companies time the issue and use book building to discover the right price based on market conditions.
- Leaves price and quantity of securities open — to be finalized after the issue closes.
## Definition
A Red Herring Prospectus is a prospectus that does not include complete particulars of the price of the securities or the quantity of securities offered.
## Filing Requirements
- The company may issue an RHP prior to the issue of the final prospectus.
- The RHP must be filed with the ROC at least 3 days before the opening of the subscription list and offer.
## Legal Status
- An RHP carries the same obligations as a prospectus.
- Any variations between the RHP and the final prospectus must be highlighted as variations in the final prospectus.
## Post-Closure Filing
After the offer closes, the final prospectus is filed with both the ROC and SEBI, containing:
1. Total capital raised (debt or share capital);
2. Closing price of the securities;
3. Any other details that were omitted from the red herring prospectus.
## Book Building Process (Brief)
- Book building is a price discovery mechanism.
- The company specifies a price band (range) instead of a fixed price.
- Underwriters collect orders from institutional investors, fund managers, and others — specifying both quantity and price they're willing to pay.
- The final price is set based on the demand profile.
## Timeline Cheat Sheet
```
[Draft RHP filed with ROC]
↓ (at least 3 days)
[Offer opens — book building]
↓
[Offer closes]
↓
[Final Prospectus filed with ROC + SEBI]
```