The process for large companies to get listed on the stock market in India has now become much easier. The government has changed the rules related to Initial Public Offerings (IPOs).
Under the new rules, companies with a post-listing market value of more than ₹5 lakh crore will now need to sell only 2.5% of their paid-up capital to the public.
Earlier, many big companies faced difficulties while launching public issues because they had to offer a larger share to the public.
With the new changes, the government aims to make stock market listings easier for large companies while still maintaining public participation in the market.
Key Changes in IPO Rules
According to the new rules, companies must reserve at least 2.5% of each equity share class for public investors.
The government has also introduced a timeline to gradually increase public shareholding so that investor participation in the market grows over time.
If a company’s public shareholding is less than 15% at the time of listing, it will have to increase it to 15% within 5 years and 25% within 10 years.
However, if a company already has more than 15% public shareholding at the time of the IPO, then it must increase that to 25% within the next 5 years.
Different Rules Based on Company Size
The government has also set different public shareholding requirements based on a company’s market capitalization.
Companies with a market cap between ₹1 lakh crore and ₹5 lakh crore must offer at least 2.75% of their shares to the public during an IPO.
For smaller companies, the required percentage is higher to ensure enough participation from investors.
For example, companies with a market capitalization between ₹50,000 crore and ₹1 lakh crore must offer at least 8% of their shares to the public.
The new rules also mention that if a company has equity shares with Superior Voting Rights (SVR) and wants to list its ordinary shares on the stock exchange, then the SVR shares must also be listed.
Easier Path for Large Companies Like NSE and Reliance Jio
The government has officially implemented these changes. Experts believe the new rules could encourage many large companies to launch their IPOs.
In particular, companies such as the National Stock Exchange and Reliance Jio may now find it easier to get listed on the stock market under the updated regulations. ????
