Will SEBI Simplify IPO Rules for Major Corporations?
Click to start listening
Synopsis
SEBI is set to simplify IPO regulations for large firms, aiming to reduce the immediate pressures of public shareholding compliance. This initiative could revolutionize how major companies approach IPOs, making it easier for them to enter the market while fostering gradual public participation.
Key Takeaways
- SEBI proposes relaxed IPO rules for large firms.
- Minimum public offer requirements may be reduced.
- Retail quota for significant IPOs to drop to 25%.
- Longer timelines for companies to raise public shareholding.
- Public feedback on proposals is welcomed until September 8.
Mumbai, Aug 18 (NationPress) - The Securities and Exchange Board of India (SEBI) has unveiled a consultation paper aimed at proposing more straightforward regulations for large corporations looking to initiate their Initial Public Offerings (IPOs). The suggestions include easing minimum public offer obligations and extending the timeline for compliance with public shareholding standards.
At present, substantial companies must provide a significant share of their stocks to the public upon listing.
This requirement often leads to excessively large IPOs that the market struggles to accommodate.
SEBI asserts that the proposed guidelines will alleviate the immediate burden on these entities to dilute their ownership while still mandating gradual adherence to public shareholding regulations.
Among the modifications, the market regulator has proposed a decrease in the retail quota for IPOs exceeding Rs 5,000 crore.
Instead of the current 35 percent allocation, only 25 percent of shares would be set aside for retail investors in these considerable offerings.
The regulator emphasized that issuers frequently face challenges in managing massive IPOs, and this adjustment aims to streamline the process.
Under the new framework, companies valued between Rs 50,000 crore and Rs 1 lakh crore must present a minimum public offer of Rs 1,000 crore and at least 8 percent of their post-issue capital.
They are required to elevate their public shareholding to 25 percent within five years.
For entities valued between Rs 1 lakh crore and Rs 5 lakh crore, the minimum public offer will be Rs 6,250 crore and at least 2.75 percent of post-issue capital.
If a company's public shareholding is below 15 percent at the listing time, it must be increased to 15 percent within five years and to 25 percent within a decade.
However, if they already possess 15 percent or more at the listing, they must achieve 25 percent within five years.
This means that major corporations will have the leeway to commence with smaller IPOs and progressively expand public ownership over a longer duration.
SEBI is welcoming public comments on these proposals until September 8.
Point of View
I recognize the importance of SEBI's proposals in balancing the needs of large corporations with the interests of retail investors. These changes could foster a healthier market environment, promoting both corporate growth and public participation. NationPress stands by the need for accessible and transparent regulations that benefit all stakeholders.
NationPress
07/10/2025
Frequently Asked Questions
What are SEBI's proposed changes to IPO regulations?
SEBI suggests easier rules for large companies, including reduced minimum public offer requirements and an extended timeline for meeting public shareholding norms.
How will the retail quota for IPOs change?
The retail quota for IPOs above Rs 5,000 crore will be reduced from 35 percent to 25 percent.
What is the new minimum public offer requirement for large firms?
Companies valued between Rs 50,000 crore and Rs 1 lakh crore will need a minimum public offer of Rs 1,000 crore, while those valued between Rs 1 lakh crore and Rs 5 lakh crore will require Rs 6,250 crore.
When can the public provide feedback on SEBI's proposals?
SEBI is inviting public feedback on these proposals until September 8.
What impact could these changes have on the IPO market?
These changes may ease the burden on large firms and facilitate a smoother IPO process, potentially benefiting retail investors.
