Key Takeaway:

• Earlier framework was simple (25% / 10% route).
• New framework is highly granular and valuation-linked, allowing very large IPOs to list with significantly lower initial dilution but with longer phased compliance timelines.

The Central Government, vide notification dated 13 March 2026, has amended Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) through the Securities Contracts (Regulation) Amendment Rules, 2026. The amendment introduces a revised framework for minimum public offer and allotment requirements at the time of listing, particularly impacting large-capitalisation IPOs and companies with superior voting rights structures.

Present Provisions (Pre-Amendment Position)

Prior to this amendment, the minimum public shareholding (“MPS”) requirement broadly mandated:

• At least 25% public shareholding for most companies at the time of listing.
• Companies with post-issue capital exceeding Rs. 4,000 crore were permitted to list with a minimum of 10% public shareholding, subject to the condition that such companies increase their public shareholding to 25% within 3 years.
• This framework was primarily designed to balance liquidity requirements with flexibility for large issuers.

However, with the growing size of IPOs and emergence of mega-capitalisation companies, concerns arose regarding market float, price discovery, and concentration of ownership.

Key Changes Introduced by the Amendment

The amendment introduces a graded public offer requirement linked to post-issue capitalisation, significantly altering the earlier uniform thresholds. The revised norms are:

1. Up to Rs. 1,600 crore post-issue capital
   --Minimum 25% public offer (no change in principle).
2. Rs. 1,600 crore to Rs. 4,000 crore
   --Public offer equivalent to Rs. 400 crore value, with obligation to reach 25% within 3 years.
3. Rs. 4,000 crore to Rs. 50,000 crore
   --Minimum 10% public offer, with obligation to reach 25% within 3 years.
4. Rs. 50,000 crore to Rs. 1 lakh crore
   --Public offer equivalent to Rs. 1,000 crore value and at least 8% shareholding, with 5-year timeline to achieve 25% MPS.
5. Rs. 1 lakh crore to Rs. 5 lakh crore
   --Public offer equivalent to Rs. 6,250 crore value and at least 2.75% shareholding.
   If listing MPS is below 15%, company must reach 15% in 5 years and 25% in 10 years.
6. --Above Rs. 5 lakh crore
   Public offer equivalent to Rs. 15,000 crore value and minimum 1% shareholding (subject to minimum 2.5% public offer requirement).

Further, companies having Superior Voting Rights (SVR) shares must mandatorily list such shares along with ordinary shares.

Importantly, existing listed companies are also permitted to avail revised timelines for achieving MPS.

Impact and Categories of Companies Likely to be Affected

The amendment will have significant implications for:

• Large and mega IPO issuers, particularly new-age technology and platform companies with high valuations.
• Promoter-driven companies seeking to retain higher ownership at listing stage.
• Companies proposing SVR share structures, especially founder-led startups.
• PSUs or large conglomerates planning phased disinvestment through IPOs.
• Existing listed companies currently non-compliant with MPS norms, who may now benefit from extended timelines.

Broader Regulatory and Market Impact

The revised framework aims to improve liquidity management while facilitating large listings, allowing promoters to stagger dilution without compromising long-term public float objectives. It may also encourage mega IPOs in India, enhance global competitiveness of Indian capital markets, and support innovation-led issuers.

However, the reduced initial float in very large IPOs could impact short-term liquidity and price discovery, necessitating active monitoring by stock exchanges and Securities and Exchange Board of India.

Overall, the amendment represents a calibrated regulatory shift, balancing capital formation needs with investor protection and market depth.