Sebi relief in IPO validity, public float compliance timelines

Capital markets regulator Sebi has eased both the IPO validity timelines and the mandate to meet 25% minimum public shareholding (MPS) by offering a one-time relief as the market remains jittery.

In two separate circulars issued on Tuesday, the Sebi gave an additional six months to companies. It said IPO approvals expiring between April 1 and September 30 will now remain valid till September 30, 2026 subject to an undertaking from lead manager who will submit updated offer document to the board later.

The Sebi has allowed a similar kind of relief in 2020 during the Covid.

“Considering industry representation, the prevailing uncertain market conditions due to ongoing geopolitical tension and subdued investor participation, the Sebi has decided to grant one-time relaxation to extend validity of Sebi observations letters, expiring between April 1, and September 30, till September 30, 2026 provided an updated offer document is submitted later,” Sebi said.

Under the existing norms, a public issue may be opened within 12 months and 18 months respectively from the date of issuance of Sebi observations. One-time relaxation coming to effect immediately, gives companies around six months additional time to launch IPOs without having to restart the regulatory process.

Changes come after Sebi received industry representation on difficulties faced in mobilizing resources and accessing the market in due to the Iran war, leading to several issuers to defer, recalibrate or withdraw IPOs.

In another circular, Sebi has relaxed enforcement of MPS norms, providing relief to listed entities struggling to meet the 25% public float mandate, the timeline for which is based on market cap.

“Sebi has received industry representation highlighting the difficulties faced by listed entities in complying with MPS, on account of market volatility arising from ongoing geopolitical tensions in the Middle East,” the circular said.

The regulator has also directed stock exchanges and depositories not to initiate any penal action, including fines or freezing of promoter shareholding for those whose MPS compliance deadlines fall between April 1 and September 30. Further, it also said any penalties already imposed during this period will be withdrawn.

Welcoming the relaxations, Mahavir Lunawat, chairman of the Association of Investment Bankers said, “the one-time relaxations will support IPO-bound companies with approvals nearing expiry by providing additional time and flexibility. It enables issuers to better assess market conditions and strategically time their issues amid heightened volatility and subdued sentiment.”