SEBI Proposes Easing IPO Norms for Large Firms, Retains Retail Quota
India’s market regulator SEBI has introduced a comprehensive series of relaxations to simplify listing requirements for large issuers, which includes lowering minimum public offer limits and extending the deadlines for achieving minimum public shareholding (MPS).
Companies with a post-issue market capitalization ranging from Rs.50,000 crore to Rs.1 lakh crore may experience a reduction in their minimum public offer from 10 percent to eight of post-issue share capital.
For companies valued at over Rs.1 lakh crore but not exceeding Rs.5 lakh crore, SEBI has proposed a new minimum public offer of Rs.6,250 crore and at least 2.75 percent of post-issue share capital, instead of the current requirement of five percent.
Firms with market capital exceeding Rs.5 lakh crore would be required to provide a minimum offer of Rs.15,000 crore and one percent of post-issue capital, with a minimum dilution of 2.5 percent.
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Regarding timelines, SEBI has recommended extending the period for complying with the 25 percent MPS requirement. Issuers with market capitalization between Rs.50,000 crore and Rs.1 lakh crore could be given five years instead of three.
For companies with a post-issue market capitalization above Rs.1 lakh crore, SEBI proposed a phased approach for conforming to minimum public shareholding rules.
If the public shareholding is less than 15 percent at the time of listing, issuers must increase it to a minimum of 15 percent within five years after listing, and subsequently up to the required 25 percent within a 10-year period.
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If the public shareholding exceeds 15 percent on the listing date, the 25 percent MPS needs to be achieved within five years from the listing date.
The regulator stated that this staggered timeline would provide very large issuers the necessary flexibility to adhere to public float regulations without placing undue pressure on market absorption.
Importantly, SEBI has maintained the retail allocation quota at 35 percent for IPOs, reversing a previous intention to lower it to 25 percent for substantial issuances.
SEBI mentioned that these proposals are designed to enhance capital formation, facilitate fundraising for issuers, and broaden investor access to premier listings.
Stakeholders are invited to submit their feedback until 8 September 2025.