Finance Ministry (DEA) reduces minimum public shareholding for IPOs to 2.5%

Key facts

• Department of Economic Affairs (DEA) notified amendments to Securities Contracts (Regulation) Rules, 1957 on 13 March.
• Minimum mandated public shareholding of a listed stock reduced from 5% to 2.5%.
• Companies with post-issue capital ≤ ₹1,600 crore must offer at least 25% of each class of equity shares or debentures to the public.
• Companies with post-issue capital > ₹1,600 crore but ≤ ₹4,000 crore must offer at least a percentage equivalent to ₹400 crore.
• Companies with post-listing valuation > ₹4,000 crore but ≤ ₹50,000 crore must offer at least 10% of each share or debenture, subject to increasing public shareholding to at least 25% within three years.
• Companies with post-listing valuation > ₹50,000 crore but < ₹1 lakh crore must offer at least ₹1,000 crore and at least 8% of each share or debenture, subject to increasing public shareholding to at least 25% within three years.
• Companies with post-listing valuation > ₹1 lakh crore but ≤ ₹5 lakh crore must offer at least 2.75% of each share or debenture, subject to achieving specified timelines.
• Companies with post-listing valuation > ₹5 lakh crore must offer at least 1% of each share or debenture if public shareholding at listing is <15%, increasing to at least 15% within five years and 25% within ten years.
• Amendment clears the way for Reliance-owned Jio Platform and National Stock Exchange IPOs.