Sebi grants one-time relaxation for IPO validity, minimum public shareholding

Amid the weakness in securities markets, the Securities and Exchange Board of India (Sebi) has provided one-time relaxation for initial public offering (IPO) validity as well as minimum public shareholdings (MPS) on Tuesday.

The regulator has given a temporary relaxation for companies whose initial public offering (IPO) validity are set to expire between April 1 and September 30. The markets regulator has granted a one-time extension of validity till September 30 for such companies, as per a circular issued on Tuesday.

Currently, a public issue must be opened within 12-18 months of getting observation letters from the regulator, as per Sebi’s Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018.

40 issuers will benefit from this decision who are estimated to raise at least ₹43,500 crore altogether, according to data from Prime Database. Among the beneficiaries are Credila Financial Services, Dorf-Ketal Chemicals India, Continuum Green Energy, Hero Fincorp, and Juniper Green Energy whose IPO validity were set to expire between April 15 and August 28.

On what condition has the relief been issued?

The relief has been provided on the condition that the lead manager to the issue will provide a written undertaking, confirming the compliance with Schedule XVI of the ICDR Regulations while submitting the updated offer document to Sebi.

In the backdrop of the geopolitical tensions in West Asia, industry bodies informed Sebi about issuers’ difficulties with respect to mobilizing resources and accessing the capital market. “This has led to several issuers to defer, recalibrate or withdraw issuance plans leading to potential lapses in observation letter validity and duplication of regulatory processes,” Sebi said.

India’s primary and secondary markets have been seeing the ripple effect of the aggravated tension in West Asia. Since the beginning of the war at the end of February, the secondary market has fallen 8%. Foreign investors pulled out over $12 billion, the record monthly outflows the market has ever seen.

The month of February saw the second-lowest number of issuances in FY26, with 17 IPOs raising ₹4,650 crore. Some companies had kept their public offers on hold due to the market conditions, including the mainboard IPO-bound PhonePe and GIFT City IPO-bound XED Executive Development which withdrew its issue last week.

Ease in MPS compliance

Sebi has also granted a one-time relaxation in the minimum public shareholding (MPS) norms for listed entities. The regulator said the ease in norms will be applicable for companies whose due date for compliance of MPS norms falls between April 1 and September 30.

As a result, recognised stock exchanges and depositories will not take any penal action for non-compliance of norms during this period. Any such action initiated during the specified time period will be withdrawn, Sebi said in another circular. The regulator also advised stock exchanges to make amendments to bye-laws, rules and regulations to implement Sebi’s decision.