Finance Ministry Amends IPO Rules: Introduces Tiered Framework for Minimum Public Offers

Government Implements Revised Framework for Public Shareholding

The government has introduced a revised framework for public shareholding, which came into effect from the date of publication in the official gazette. The new rules aim to increase transparency and fairness in the public offering process.

Key Changes to the Revised Framework

• Minimum Public Offer: Companies with post-issue capital above Rs 1,600 crore but less than Rs 5,000 crore must increase their public shareholding to at least 25% within three years from listing.
• Minimum Public Offer Quantity:
  • Companies with post-issue capital of up to Rs 1,600 crore must offer at least 25% of each class of equity shares or debentures convertible into equity shares to the public.
  • Companies with post-issue capital of more than Rs 1,600 crore but less than Rs 4,000 crore must offer shares equivalent to Rs 4,000 crore.
  • Companies with post-issue capital of above Rs 4,000 crore but less than or equal to Rs 5,000 crore must offer at least 10 crore of each class of equity shares or convertible debentures to the public.
  • Companies with post-issue capital of above Rs 5,000 crore but less than or equal to Rs 1 lakh crore must offer shares equivalent to Rs 1,000 crore and at least 8% of each class of shares or convertible debentures to the public.
• Public Shareholding Increase:
  • Companies with post-issue capital of above Rs 1 lakh crore but less than or equal to Rs 5 lakh crore must offer shares equivalent to at least Rs 6,250 crore and at least 2.75% of each class of shares or convertible debentures to the public.
  • Companies with post-issue capital above Rs 5 lakh crore must offer shares equivalent to at least Rs 1,500 crore and at least 1% of each class of shares or convertible debentures to the public.

Timeline for Public Shareholding Increase

• Companies with public shareholding of less than 15% at the time of listing must increase it to at least 15% within five years and to at least 25% within 10 years from listing.
• Companies with public shareholding of 15% or more at the time of listing must increase their public shareholding to 25% within five years from listing.