SEBI Extends Deadline for Companies to Meet Minimum Public Shareholding Norms

India’s market regulator, the Securities and Exchange Board of India (SEBI), has relaxed IPO-related regulations, granting large companies additional time to meet the minimum public shareholding (MPS) requirements. The decision, taken during SEBI’s recent board meeting, aims to ease compliance pressures for major corporations and encourage more firms to list publicly.

 

Under the revised rules, companies with a market capitalisation of ₹50,000 crore or more — and especially those valued above ₹1 lakh crore — will now have five years instead of the earlier three to meet the 25% public shareholding norm after their initial public offering (IPO). Similarly, companies with a market value exceeding ₹5 lakh crore will have ten years to meet the requirement, with an interim milestone of 2.5% public shareholding within one year of listing.

 

The move is expected to make IPOs more attractive for large enterprises by providing flexibility in share dilution timelines, ultimately encouraging more high-value companies to enter the public markets.

Changes for Anchor Investors and Allocation Norms

SEBI has also revised rules regarding anchor investors. The lock-in period for a portion of shares allocated to anchor investors has been increased from 10 days to 15 days, enhancing market stability and investor confidence. Moreover, 40% of the shares allocated to anchor investors will now be reserved for mutual funds and insurance companies, ensuring greater institutional participation in IPOs.

 

Longer Timeline for Overseas Listing

Additionally, SEBI has extended the timeline for Indian companies seeking overseas listings. Firms will now have up to 10 years to meet overseas listing requirements, offering them more strategic flexibility in tapping global capital markets.

SEBI Chairman Tuhin Kant Pandey stated that these changes reflect the regulator’s commitment to fostering a more robust and inclusive capital market ecosystem. The relaxed timelines and investor-friendly measures are expected to bolster IPO activity, attract greater foreign investment, and strengthen India’s position as a leading global investment destination.

 

Facilitating Foreign Investment with ‘Welcome FPI’ Mechanism

To make India a more attractive destination for global capital, SEBI has approved the introduction of a simplified registration process for foreign portfolio investors (FPIs), termed the “Welcome-FPI” mechanism. This initiative will provide an expedited registration process, reducing paperwork and compliance hurdles for eligible foreign investors, thereby facilitating smoother capital inflows into Indian markets.