India redefines minimum public offer and allotment norms for firms seeking to list

The government has amended rules governing minimum public offer requirements for companies seeking to list on stock exchanges, introducing a tiered framework linked to a company’s post-issue capital.

In a notification issued on March 13, the Ministry of Finance amended Rule 19 of the Securities Contracts (Regulation) Rules, 1957 through the Securities Contracts (Regulation) Amendment Rules, 2026.

The changes came into force from the date of publication in the official gazette.

Under the revised framework, the minimum offer and allotment to the public will vary depending on the company’s post-issue capital calculated at the offer price.

For companies with post-issue capital of up to ₹1,600 crore, at least 25% of each class of equity shares or debentures convertible into equity shares must be offered to the public.

Where the post-issue capital exceeds ₹1,600 crore but is up to ₹4,000 crore, companies must offer shares equivalent to a value of at least ₹400 crore to the public.

For companies with post-issue capital above ₹4,000 crore and up to ₹50,000 crore, the minimum public offer will be at least 10% of each class of equity shares or convertible debentures. Such companies must raise their public shareholding to at least 25% within three years of listing, in the manner specified by the Securities and Exchange Board of India.

For companies with post-issue capital above ₹50,000 crore and up to ₹1 lakh crore, the rules require a public offer equivalent to at least ₹1,000 crore and not less than 8% of each class of shares or convertible debentures. These companies must increase public shareholding to at least 25% within five years of listing.

Companies with post-issue capital above ₹1 lakh crore and up to ₹5 lakh crore must offer shares equivalent to at least ₹6,250 crore and not less than 2.75% of each class of securities to the public.

For companies with post-issue capital exceeding ₹5 lakh crore, the minimum public offer must be equivalent to at least ₹15,000 crore and at least 1% of each class of equity shares or convertible debentures.

The notification also specifies timelines for companies in the largest capital brackets to increase public shareholding after listing. If public shareholding at the time of listing is below 15%, such companies must raise it to at least 15% within five years and to 25% within ten years. If it is already 15% or higher at listing, they must reach 25% within five years.

The rules further state that at least 2.5% of each class of securities must be offered to the public, notwithstanding the provisions applicable to the largest companies.

The government also said the timelines to achieve the prescribed public shareholding will be available to companies that were listed on or before the commencement of the amendment rules.

Additionally, companies that have issued equity shares with superior voting rights to promoters or founders and are seeking to list ordinary shares must list those superior voting rights shares on the same recognised stock exchange alongside the ordinary shares being offered to the public.

The notification also allows recognised stock exchanges to impose penalties on companies for non-compliance with public shareholding norms committed before the amendment rules came into force.