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Informist, Friday, Sept. 12, 2025

 

--SEBI:To ask govt to tweak securities law on minimum public shrholding rule

--SEBI for more time to mega IPO issuers to meet 25% minimum public holding

 

NEW DELHI – The board of the Securities and Exchange Board of India, which met Friday, has decided to recommend to the government an amendment of the Securities Contracts (Regulations) Rules, 1957, framed under the Securities Contracts (Regulation) Act, 1956, to extend the timeline for companies making large initial public offerings to achieve the minimum public shareholding of 25%. The amendment is also meant to give large issuers flexibility in terms of the minimum offer size at the time of making their initial public offering.

 

As per the amendment proposed by SEBI, the timeline for compliance with the minimum public shareholding norm for companies with post-issue market capitalisation of more than INR 500.00 billion but less than INR 1.00 trillion is to be raised to five years from the date of listing. Currently, the timeline is three years from the date of listing. At the time of the initial public offering, these issuers currently have to make a minimum public offer of 10% of the post-issue share capital. SEBI seeks to change this to a minimum public offer of INR 10.00 billion and at least 8% of the post-issue market capitalisation.

 

For issuers with post-issue market capitalisation of INR 1.00 trillion or more, and up to INR 5.00 trillion, minimum public shareholding of 10% has to be achieved within two years of the date of listing, going up to 25% within five years. SEBI has now proposed that in case the public shareholding as on the date of listing is less than 15%, a minimum public shareholding of 15% must be achieved within five years of listing, going up to 25% within 10 years. In case the public shareholding as on the date of listing is above 15%, then the company will have to achieve a minimum public shareholding of 25% within five years of listing.

 

For issuers with a post-issue market capitalisation of more than INR 5.00 trillion, currently a minimum public shareholding of 10% has to achieved within two years of listing, going up to 25% within five years. SEBI wants the timeline extended for such issuers as well.

 

The regulator has proposed that the 25% minimum public shareholding norm should be met within 10 years of the date of listing if the public shareholding is less than 15% at the time of listing. In such cases, the companies will first need to reach a public shareholding of at least 15% within five years of the listing date. If the public shareholding is at least 15% at the time of listing, then SEBI proposes that such issuers will need to meet the 25% minimum public shareholding norm within five years of listing.

 

For issuers with a post-issue market capitalisation of INR 1.00 trillion and above, the current norms say the minimum public offer size has to be INR 50.00 billion and at least 5% of the post-issue market capitalisation. SEBI is going to propose to the government that issuers with a post-issue market capitalisation of INR 1.00 trillion and up to INR 5.00 trillion be allowed to make a minimum public offer of INR 62.50 billion and at least 2.75% of the post-issue market capitalisation. For issuers with a post-issue market capitalisation of more than INR 5.00 trillion, SEBI is going to recommend that the minimum public offer size be INR 150.00 billion and at least 1% of the post-issue market capitalisation, subject to a minimum dilution of 2.5%.

 

SEBI is also going to recommend to the government to allow the proposed extended timelines to existing listed entities that are yet to comply with the minimum public shareholding rule as per the existing timelines applicable to them.  End

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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