Business · Companies · 1 hr ago
SEBI proposes lower SME IPO application minimum and tighter profit rules
India’s market regulator SEBI has proposed a broad rewrite of rules for small-company IPOs.
The proposals would lower the minimum application amount from ₹2 lakh to ₹1 lakh, with applications covering at least four lots worth ₹25,000 each.
Companies would need average annual operating profit of ₹3 crore over three years to meet the proposed profitability test, up from the current requirement of ₹1 crore in at least two of those years.
Listing rules would depend on a company’s market value after its IPO: those worth up to ₹1,000 crore would list on the SME platform, while those worth ₹1,000 crore to ₹4,000 crore could choose that platform or the main board.
Companies valued above ₹4,000 crore would have to list on the main board, according to one account of the proposals.
Firms that miss the profit test could still use an alternative route, but at least 75% of the net offer would need to go to qualified institutional buyers.
SEBI says the changes aim to reduce fundraising costs while keeping investor safeguards, and has also proposed ending compulsory market making and easing underwriting requirements.
The regulator is seeking public comments by November 4 before the proposals can proceed.
SEBI has proposed lowering the minimum application value for SME IPOs to ₹1 lakh from ₹2 lakh.
The proposals would raise the minimum profitability requirement to an average operating profit of ₹3 crore a year over three financial years.
SEBI also proposes basing listing eligibility on post-issue market capitalisation, with companies above ₹4,000 crore required to list on the main board.
The regulator has invited public comments on the proposals by November 4.
- Who
- The Securities and Exchange Board of India (SEBI), India’s capital-markets regulator.
- What
- It proposed changes to rules for initial public offerings by small and medium enterprises, including a lower application minimum and tighter profitability criteria.
- When
- The proposals were issued on Wednesday; the articles were published on October 14 and 15, 2026.
- Where
- India’s SME IPO market.
- Why
- The changes are intended to make the framework more proportionate to issuer size while retaining safeguards for investors and market integrity.
This story does not have two clearly opposing sides.
SEBI issued a consultation paper proposing changes to SME IPO rules.
Deadline for public comments on the proposals.
- Minimum application value
- Proposed at ₹1 lakh, down from ₹2 lakh
- Minimum lot value
- ₹25,000, with applications required to cover four lots
- Profitability threshold
- Average operating profit of ₹3 crore annually over the preceding three financial years
- Market capitalisation up to ₹1,000 crore
- Companies would have to list on the SME platform
- Market capitalisation above ₹4,000 crore
- Companies would have to pursue a main-board listing
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What people are saying
The existing requirement of two lots per application with a minimum application value above ₹2 lakh may limit participation and may not appropriately balance accessibility with the objective of ensuring meaningful applications