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The Finance Ministry has revised the IPO Rules

Published : 18 March 2026
Updated : 20 March 2026
The Finance Ministry has revised the IPO Rules

An Initial Public Offering (IPO), or stock launch, is a public offering in which shares of a company are sold to the public or new investors to raise equity capital. Through this process, a privately held company is transformed into a public company. In India, IPOs are governed primarily by SEBI’s (ICDR) Regulations and by Securities Contract Rules, 1957, for public shareholding norms.

Types of IPO

Two common types of IPO are:

  • Fixed Price Offering - The company, along with its underwriters, evaluates its assets and liabilities and every financial aspect to fix a price per issue. The share price is fixed on the first day of the issue.

  • Book Building Offering - The price is determined during the IPO process. There is a price band (a floor price and a cap price), but no fixed price. 

An initial public offering can be made through a fixed price offering, a book building offering, or a combination of both.

Who can invest in an IPO?

1. Qualified Institutional Buyers (QIBs): 

Foreign Portfolio Investors (FPIs) / Foreign Institutional Investors (FIIs), Mutual Funds and Asset Management Companies, Commercial and Scheduled Banks, Insurance Companies, Pension Funds and Provident Funds, Venture Capital Funds and Alternative Investment Funds, Public Financial Institutions.

2. Retail Investors: 

An individual investor who applies to an IPO with an amount less than or equal to Rs. 2 lakh.

3. Anchor Investors: 

QIBs that invest in an IPO before it opens to the general public.

4. HNI: 

individuals who can bid for more than Rs. 2 lakh, up to Rs. 5 lakh worth of equity shares.

Amendments (Securities Contracts Regulation Amendment Rules, 2026)

  • Minimum public offer and allotment requirements: The Government has introduced a graded framework linked to the company’s post-issue capital calculated at the offer price. 

For companies:

Post-Issue Capital

Minimum Public Offer

<= Rs. 1,600 Cr.

>=25% of each class of equity shares or convertible securities

>= Rs. 1,600 Cr. and <= Rs. 4,000 Cr.

Shares equivalent to Rs. 400 Cr. with public shareholding to be increased to 25% within 3 years of listing

>=Rs. 4,000 Cr. and <=Rs. 50,000 Cr.

>=10% with public shareholding to be increased to 25% within 3 years of listing

>=Rs. 50,000 Cr. and <= Rs. 1 lakh Cr.

Shares equivalent to Rs. 1,000 Cr. and at least 8% with public shareholding to be increased to 25% within 5 years of listing

>= Rs. 1 lakh Cr. and <=Rs. 5 lakh Cr.

Shares equivalent to Rs. 6,250 Cr. and at least 2.75% with phased timelines to increase the public shareholding to 15% within 5 years of listing and 25% within 10 years.

>=Rs. 5 lakh Cr.

Shares equivalent to Rs. 15,000 Cr. and at least 1% with phased timelines to increase the public shareholding to 15% within 5 years of listing and 25% within 10 years.

Note: A minimum of 2.5% public offer has been prescribed in spite of the given threshold.

  • For companies listed in an IFSC (International Financial Services Centre): Graded threshold shall not apply, and minimum public shareholding requirements shall be 10% irrespective of post-issue capital.
  • Automatic/ Voluntary Lock-in: Automatic lock-in for pre-issued capital to handle pledged shares.

ABBREVIATION: 

  • SEBI ICDR: Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) 
  • SEBI: Securities and Exchange Board of India
  • IFSC: International Financial Services Centre
  • HNI: High Net-Worth Individual

Sources: livemint, wikipedia, groww, taxmann

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