Summary of this article
Central government has amended minimum public shareholding rules for IPO-bound companies
Large companies have more flexibility in raising public shareholding to 25 per cent
The Centre has amended the minimum public shareholding rules and introduced a graded framework to allow large companies looking to tap the primary market to offer a smaller portion of shares in their initial public offerings (IPOs). This tweak will pave the way for mega companies to offer shares to the public.
The new framework has introduced a tiered structure based on the size of the company’s capital after the issue in the primary market is calculated at the offer price. The changes in rules, issued through a gazette notification on March 13, 2026, allows companies with a post-issue market valuation of up to Rs 5 lakh crore to dilute as little as 2.50 per cent in a public issue, from a minimum of 5 per cent earlier. The Securities and Exchange Board of India (Sebi) had approved this amendment in September, 2025.
This change will make it easier for large companies to start issuing shares in the primary market and ensure that the public shareholding eventually reaches to 25 per cent. According to the amendments, companies with a capital of Rs 1,600 crore after the issue will continue to follow the requirement of offering at least 25 per cent shares to the public, of each class or kind of equity shares, or debentures convertible into equity shares. The 25 per cent public stake requirement remains unchanged for relatively smaller companies planning to list.
For falling within a post-issue capital of Rs 1,600 crore to Rs 4,000 crore, the public issue will now be linked to a minimum value of Rs 400 crore worth of issuance instead of a fixed percentage.
Companies with a post-issue capital of Rs 4,000 crore to Rs 50,000 crore will need to offer at least 10 per cent of their stake to the public in the issuance. However, over a period of three years from the date of listing, the public shareholding of the company needs to increase to 25 per cent, in accordance with the processes specified by Sebi.
Larger companies with a post-issue capital of Rs 50,000 crore to Rs 1 lakh crore will need to offer a minimum issue of Rs 1,000 crore in order to tap the primary market, and at least 8 per cent of each class of shares at the issue. Over five years from the date of listing, these companies need to increase the public shareholding to 25 per cent.
Companies with post-issue capital exceeding Rs 1 lakh crore up to Rs 5 lakh crore only need to issue 2.75 per cent at the time of listing, or offer at least Rs 6,250 crore worth of shares in the primary issue.
For mega companies, with a post-issue capital exceeding Rs 5 lakh crore, the primary issue must offer a minimum of Rs 15,000 crore and a minimum public shareholding of 1 per cent. If the companies offer public shareholding below 15 per cent at the time of listing, then they must increase the shareholding to at least 15 per cent within five years from the listing date, and further raise it to 25 per cent within 10 years of making its debut on stock exchanges.
The amendments also noted that irrespective of the size of the company, at least 2.50 per cent of each class of shares or convertible securities need to be offered to the public at the time of issuance. The amendment also stated that companies that have issued equity shares with superior voting rights (SVR) to promoters or founders, must also list those shares along with the ordinary shares on the same stock exchange.
