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Informist, Monday, Aug. 18, 2025

 

NEW DELHI – The Securities and Exchange Board of India issued a consultation paper Monday on minimum public shareholding for issuers as specified in the Securities Contracts (Regulation) Rules, 1957. The market regulator has proposed that companies be given flexibility in terms of minimum public offer at the time of initial public offering, and also relax the timelines to achieve the minimum public shareholding of 25% for large issuers. SEBI has proposed that for issuers with a post-issue market capitalisation of more than INR 500 billion but less than INR 1 trillion, the timeline for compliance with the minimum public shareholding be extended to five years from the date of listing from three years.

 

For issuers with a post-issue market capitalisation above INR 1 trillion, SEBI has proposed that in case public shareholding is less than 15% as on the date of listing, public shareholding of 15% must be met within five years, and 25% within 10 years, from the date of listing. In case these issuers have public shareholding of more than 15% as on the date of listing, they will have to achieve 25% public shareholding within five years from the date of listing.

 

Currently, issuers with more than INR 1 trillion of post-issue market capitalisation have to achieve public shareholding of at least 10% in two years, and 25% in five years from the date of listing. The proposed relaxation by SEBI would mean large issuers with less than 15% public shareholding on the date of listing would get 10 years, or five more years, to achieve 25% minimum public shareholding.

 

According to SEBI, large issuers are facing challenges in meeting minimum public shareholding requirements within the currently applicable timelines. "This challenge is especially pronounced in the case of issuers that are profitable, have substantial cash reserves, and are not in a high-growth phase, thereby lacking the need to raise significant capital at regular intervals," SEBI said in the paper. The market regulator said public sector companies also faced "difficulties in adhering to the MPS (minimum public shareholding) timelines." 

 

SEBI has also proposed revisions in the minimum shares to be offered in an IPO, or the minimum public offer. For large issuers with a post issue market capitalisation of more than INR 500 billion but less than or equal to INR 1 trillion, the current minimum public offer requirement is 10% of the post issue share capital. SEBI has proposed that this be revised to INR 10 billion and at least 8% of the post issue share capital.

 

For issuers with a post issue market capitalisation of more than INR 1 trillion, the current minimum public offer requirement is INR 50 billion and at least 5% of the post issue share capital. SEBI has proposed that this be revised to INR 62.50 billion and at least 2.75% of the post issue share capital for issuers with post issue market capitalisation of above INR 1 trillion but less than INR 5 trillion.

 

For issuers with post issue market capitalisation of more than INR 5 trillion, SEBI has proposed a minimum public offer requirement of INR 150 billion and at least 1% of the post issue share capital. SEBI said public comments on the proposals in the consultation paper can be sent by Sept. 8.  End

 

Reported by Rajesh Gajra

Edited by Avishek Dutta

 

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