Govt Relaxes Public Shareholding Rules to Ease IPOs for Large Companies

New Delhi: The government has revised rules on minimum public shareholding to make it easier for large companies to launch initial public offerings (IPOs), introducing a tiered structure that allows them to offer a smaller stake to the public at the time of listing and gradually increase it to 25 per cent later.

The amendments link the minimum public offer to a company’s post-issue capital at the IPO price.

Under the new framework, companies with post-issue capital above Rs 1,600 crore and up to Rs 4,000 crore will have to offer shares worth at least Rs 400 crore to the public.

For firms with post-issue capital between Rs 4,000 crore and Rs 50,000 crore, at least 10 per cent of shares must be offered at listing. These companies will be required to increase public shareholding to 25 per cent within three years, according to guidelines set by the Securities and Exchange Board of India.

Companies with post-issue capital between Rs 50,000 crore and Rs 1 lakh crore must make a minimum public offer worth Rs 1,000 crore and provide at least 8 per cent of each class of shares to public investors.

Meanwhile, firms with post-issue capital between Rs 1 lakh crore and Rs 5 lakh crore will have to offer shares valued at Rs 6,250 crore, while maintaining a minimum public shareholding of 2.75 per cent at the time of listing.

For companies with post-issue capital above Rs 5 lakh crore, the minimum public offer has been set at Rs 15,000 crore, along with a minimum public shareholding of 1 per cent at listing.

However, companies with post-issue capital up to Rs 1,600 crore will continue to follow the existing rule requiring at least 25 per cent public shareholding.

The changes have been notified through the Securities Contracts (Regulation) Amendment Rules, 2026, issued by the Ministry of Finance, India under the Securities Contracts (Regulation) Act, 1956.

The government also clarified that regardless of size, companies must offer at least 2.5 per cent of each class of equity or convertible securities to the public.

If a company lists with public shareholding below 15 per cent, it will be required to raise this to 15 per cent within five years and further increase it to 25 per cent within ten years of listing.

With inputs from IANS