Consultation Paper on Review of Requirement of Minimum Public Offer for Large Issuers

The Securities Contracts (Regulation) Rules, 1957 (‘SCRR’) currently prescribes the following in relation to an initial public offering (‘IPO’):

Post IPO Market Capitalisation (calculated at the IPO price) Minimum IPO Size Timeline to meet Minimum Public Shareholding Requirement of 25%

 

Up to Rs 1,600 crore 25% of the post-IPO equity share capital By way of the IPO
Greater than Rs 1,600 crore but up to Rs 4,000 crore Rs 400 crore Three years from the date of listing
Greater than Rs 4,000 crore 10% of the post-IPO equity share capital Three years from the date of listing

On November 20, 2020, SEBI issued a consultation paper from the perspective of issuers with a post-IPO market capitalisation exceeding Rs 10,000 crore for reviewing (i) the minimum IPO size and (ii) the timeline for meeting the minimum public shareholding requirement of 25%. The consultation paper proposed the following revisions to the SCRR and invited comments from the public:

Post IPO Market Capitalisation (calculated at the IPO price) Minimum IPO Size Timeline to meet Minimum Public Shareholding Requirement
Greater than Rs 10,000 crore and up to Rs 1,00,000 crore Rs 1,000 crore

+
5% of the post-IPO market capitalisation in excess of Rs 10,000 crore

  • 10% to be achieved within 18 months from the date of listing
  • 25% to be achieved within three years from the date of listing
Greater than Rs 1,00,000 crore
  • 10% to be achieved within two years from the date of listing
  • 25% to be achieved within five years from the date of listing
Published In:Inter Alia - Quarterly Edition - December 2020 [ English Chinese japanese ]
Date: December 31, 2020