The Indian government has approved a proposal from the capital markets regulator, Sebi, to ease the minimum public shareholding norms for large companies planning to list on domestic stock exchanges.
At its board meeting in September 2025, Sebi proposed amendments to the Securities Contracts (Regulation) Rules, 1957, for the consideration of the finance ministry. Under the changes, companies with a market capitalisation exceeding ₹5 lakh crore will be permitted a minimum dilution of 2.5 per cent of paid-up capital at listing, lower than the current 5 per cent requirement.
The regulator had also proposed longer timelines for compliance with public shareholding norms. Such large issuers will get five years from listing to reach 15 per cent public shareholding and 10 years to meet the 25 per cent threshold.
The relaxation is intended to address concerns that the market may not be able to absorb very large share supplies at one time, potentially discouraging big issuers from listing in India.
The approval could prompt several marquee companies to initiate their listing plans. Reliance Jio, National Stock Exchange and Flipkart are among the large potential issuers expected to help make 2026 a record year for initial public offerings.
Sebi has also reportedly agreed in principle to the NSE’s application to settle a long-pending legal dispute that has delayed the exchange’s IPO.
Addressing the annual convention of the Association of Investment Bankers in Mumbai on Thursday, Sebi chairman Tuhin Kanta Pandey said India’s market capitalisation to GDP ratio has increased from 69 per cent in FY16 to over 130 per cent currently.
In the first nine months of the current financial year, 311 IPOs raised ₹1.7 trillion, while overall equity mobilisation crossed ₹3.8 trillion. Debt issuances during the period totalled ₹6.8 trillion. A strong fundraising pipeline exists, with issuers potentially raising another ₹1.5 trillion, Pandey said.
However, he flagged recurring disclosure gaps in public issues, identifying risk factors, valuation rationale, objects of the issue and use of proceeds as areas needing sharper articulation.
Disclosures on capital structure must clearly explain past fund raisings, preferential allotments and changes in control, particularly close to an IPO. Issuers should also offer clearer explanations of business models, revenue streams and cost drivers, while management discussion and analysis must explain performance drivers, Pandey said.