SEBI Gets Government Nod To Ease Public Shareholding Rules For Large Listings

The Ministry of Finance has approved the Securities and Exchange Board of India’s (SEBI) proposal to relax minimum public shareholding norms for large companies planning domestic listings.

According to the amended Securities Contracts (Regulation) Rules, 1957, firms with a market capitalisation exceeding Rs 5 lakh crore will now need a minimum dilution of 2.5% at the time of listing, down from the previous 5%. Such companies will have five years to reach 15% public shareholding and ten years to meet the 25% threshold. The regulatory relaxation is intended to prevent the market from being unable to absorb very large share supplies at once, which could discourage major issuers from listing in India. Potential issuers expected to benefit include Reliance Jio, Flipkart, and the National Stock Exchange (NSE). SEBI has also agreed in principle to settle a long-pending legal dispute delaying NSE’s IPO.

Addressing the Association of Investment Bankers’ annual convention, SEBI chairman Tuhin Kanta Pandey flagged recurring disclosure gaps in public issues. He urged issuers to provide clearer explanations on risk factors, valuations, objects of the issue, use of proceeds, capital structure, and business models. The easing of norms is expected to accelerate India’s equity fundraising and attract large-scale listings in 2026.