The Securities and Exchange Board of India (SEBI) has introduced sweeping reforms to initial public offering (IPO) and public shareholding rules for large Indian companies, offering greater flexibility to mega-cap firms planning to go public. Announced in September 2025, these changes mark one of the most significant relaxations in India’s listing framework in recent years, aimed at deepening capital markets and attracting both domestic and global investors.
Under the revised rules, companies with a post-issue market capitalization above ₹1 lakh crore will be given more time to meet the 25% minimum public shareholding (MPS) requirement. If a firm lists with less than 15% public float, it will now have five years to raise it to 15% and ten years to reach 25%. If the initial float is already at 15% or higher, the 25% threshold must be achieved within five years. For the country’s largest corporations those with a market capitalization exceeding ₹5 lakh crore the same extended timelines will apply.
The minimum public offer (MPO) thresholds have also been recalibrated. For mega-cap companies valued at more than ₹5 lakh crore, the new requirement is a public offer of at least ₹15,000 crore and a minimum dilution of 2.5% of post-issue capital, with at least 1% of the company’s shares floated. For companies between ₹1–5 lakh crore in size, the MPO has been set at ₹6,250 crore, with a dilution requirement of 2.75–2.8%. Firms valued between ₹50,000 crore and ₹1 lakh crore must now offer a minimum of ₹1,000 crore and dilute at least 8% of post-issue capital.
Beyond IPO thresholds, SEBI has also made adjustments to improve investor participation and liquidity. The anchor investor framework has been expanded to include life insurers and pension funds, while their reserved allocation has been increased to 40%. The regulator has also permitted a higher number of anchor allottees to participate in IPOs. Additionally, SEBI has lowered the maximum mutual fund exit load from 5% to 3%, streamlined onboarding processes for certain foreign investors, and relaxed related party transaction rules for listed companies.
Analysts say these reforms are designed to reduce the immediate dilution burden on large companies while ensuring that markets can absorb new supply of shares in an orderly fashion. The move is expected to particularly benefit India’s tech giants and other mega-cap firms that have so far delayed listings due to concerns about steep dilution requirements. By phasing public shareholding over longer timelines, SEBI hopes to encourage more high-profile IPOs, expand retail participation, and strengthen India’s position as a global capital markets hub.
The reforms could also make Indian markets more attractive to long-term institutional investors, with broader anchor participation and deeper liquidity. For retail investors, the changes promise greater access to high-value IPOs and more stable post-listing price performance.
Industry watchers have described the package as a landmark step in modernizing India’s capital markets. “This is about balancing ambition with market stability,” said one senior investment banker. “Large companies can now approach public markets without the fear of flooding them with supply on day one, while investors get the benefit of more measured and accessible participation.”
Taken together, these measures underline India’s ambitions to scale up its financial ecosystem and position itself as a preferred destination for both domestic capital and global funds.
| Market Cap | Minimum Public Offer | Timeline for Minimum Public Shareholding (MPS) |
|---|---|---|
| ₹1 lakh–₹5 lakh crore | ₹6,250 crore & ≥ 2.75%-2.8% | 15% in 5 yrs (if <15% at listing), 25% in 10 yrs |
| Above ₹5 lakh crore | ₹15,000 crore & ≥ 1% (min 2.5% dil.) | Same as above; phased approach |
| ₹50k–₹1 lakh crore | ₹1,000 crore & ≥ 8% | As per thresholds above |
