India has revised its public shareholding rules for companies going public, a move expected to make it easier for some of the country’s largest firms to list on stock exchanges. The government has formally notified new regulations that reduce the proportion of shares large companies must sell to the public at the time of listing.
Lower Public Float Requirement for Large IPOs
Under the revised framework, companies with an expected post-listing valuation above ₹5 trillion will now be required to offer only 2.5% of their paid-up capital to the public during their initial public offering (IPO).
Earlier, companies were required to sell a significantly larger portion of shares to meet minimum public shareholding norms.
The new rule aims to encourage large, high-value companies to list without forcing promoters to dilute a large portion of their holdings at the time of listing.
Gradual Path to 25% Public Shareholding
While the initial public float requirement has been lowered, companies must still eventually reach the standard 25% public shareholding level through a phased timeline.
The revised rules introduce a structured glide path:
- Companies with less than 15% public shareholding at the time of listing will have 5 years to reach 15%.
- These companies will have 10 years to reach the full 25% public shareholding requirement.
If a company lists with more than 15% public shareholding, it will have 5 years to increase the public shareholding to 25%.
This phased approach allows companies to gradually dilute promoter stakes instead of doing it immediately during the IPO.
Revised Public Float Rules for Mid-Sized Companies
The government has also set new minimum public float levels for companies based on their market capitalisation.
- Companies with a market capitalisation between ₹1 trillion and ₹5 trillion must offer at least 2.75% of shares to the public.
- Companies valued between ₹500 billion and ₹1 trillion must offer a minimum of 8% of shares.
These thresholds aim to balance liquidity in the market while allowing companies flexibility in structuring their IPOs.
Rules for Companies With Superior Voting Rights
The regulations also include provisions for companies that issue superior voting rights (SVR) shares, a structure sometimes used by founders to retain control.
If a company with SVR shares decides to list its ordinary equity shares, it must also mandatorily list the shares that carry superior voting rights. This ensures transparency and fair treatment of different classes of shareholders in the market.
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