The Government of India has introduced new rules that change how much share large companies must offer to the public when they launch an IPO.
Under the revised framework, companies with very large valuations will be allowed to offer a smaller percentage of shares initially and gradually increase their public shareholding over time.
The changes were introduced through the Securities Contracts (Regulation) Amendment Rules, 2026 under the Securities Contracts (Regulation) Act, 1956.
New IPO Rules for Large Companies
The updated rules introduce a tiered structure based on a company’s post-issue capital at the time of listing.
For companies with post-issue capital above ₹1,600 crore and up to ₹4,000 crore, they must offer shares worth at least ₹400 crore to the public during their IPO.
For companies with post-issue capital between ₹4,000 crore and ₹50,000 crore, the requirement is to offer at least 10 percent of their shares at the time of listing.
However, these companies must gradually increase public shareholding to 25 percent within three years, according to guidelines set by Securities and Exchange Board of India.
Special Provisions for Very Large Companies
The rules also provide separate requirements for extremely large companies.
Companies with post-issue capital between ₹50,000 crore and ₹1 lakh crore must offer shares worth at least ₹1,000 crore and maintain 8 percent public shareholding at listing.
For companies valued between ₹1 lakh crore and ₹5 lakh crore, the requirement rises to ₹6,250 crore worth of shares with 2.75 percent public shareholding at listing.
Meanwhile, companies with post-issue capital above ₹5 lakh crore must offer at least ₹15,000 crore worth of shares and maintain 1 percent public shareholding at the time of listing.
Rules for Smaller Companies Remain the Same
For companies with post-issue capital up to ₹1,600 crore, the rule remains unchanged.
These companies must continue offering at least 25 percent of their shares to the public, which is the current standard requirement.
In addition, all companies — regardless of size — must offer at least 2.5 percent of each class of equity or convertible securities to public investors.
Timeline to Increase Public Shareholding
The new rules also define a timeline for companies to increase public ownership after listing.
If public shareholding is below 15 percent at the time of listing, the company must increase it to 15 percent within five years.
After that, the company must further raise the public shareholding to 25 percent within ten years of listing.
These changes aim to make it easier for large companies to go public while still ensuring that public investors gradually gain a meaningful stake in listed firms.
