SEBI Eases Post-IPO Minimum Public Shareholding Norms For Large Companies

The Securities and Exchange Board of India on Friday introduced scaled thresholds for minimum public shareholding, based on a company’s market capitalisation, in a move aimed at simplifying fund-raising in India.

The regulator has eased MPS requirements for large-cap companies while keeping the existing norms unchanged for firms with market capitalisation below Rs 50,000 crore.

For companies valued between Rs 50,000 crore and Rs 1 lakh crore, SEBI said the minimum public shareholding of 25% can now be achieved within five years, instead of the current three. These companies will need to make a minimum public offer of Rs 1,000 crore and at least 8% of post-issue market capitalisation.

For firms with market capitalisation between Rs 1 lakh crore and Rs 5 lakh crore, SEBI has raised the minimum public offer requirement to Rs 6,250 crore, or 2.75% of post-issue market cap, compared to the earlier Rs 5,000 crore and 5% requirement.

The regulator further clarified that if public shareholding at listing is less than 15%, these companies will be given five years to meet 15% MPS and 10 years to reach 25%. However, if shareholding at listing is already 15% or more, the 25% threshold must be achieved within five years.

A new criterion has been added for companies with market capitalisation exceeding Rs 5 lakh crore. Such firms must make a minimum public offer of Rs 15,000 crore and at least 1% of post-issue market cap, subject to a minimum dilution of 2.5%.

Similar timelines apply—five years to meet 15% MPS and 10 years for 25% if starting below 15%, or five years to reach 25% if starting at 15%.

The changes come as large companies face challenges in diluting stakes due to market absorption limits, with immediate equity dilution often creating pressure on share prices.