India’s capital markets have evolved significantly over the last decade. IPO sizes have grown larger, valuations have increased sharply, and several companies now reach market capitalisations that were once seen only in global markets.
Against this backdrop, the Government has amended the Securities Contracts (Regulation) Rules, 1957 (SCRR) through the Securities Contracts (Regulation) Amendment Rules, 2026, notified on 13 March 2026, effective on the date of their publication in the Official Gazette.
The amendment revises Rule 19(2)(b), which prescribes the minimum offer and allotment to the public required for listing on a recognised stock exchange.
While the earlier framework applied a relatively simple threshold, the amended rule introduces a graduated public offer structure based on the size of the company’s post-issue capital. The change reflects the realities of modern capital markets and is particularly relevant for large and mega IPOs.
The Earlier Framework
Before this amendment, the listing requirement under Rule 19[1] of SCRR broadly required the following:
- At least 25% of each class of equity shares to be offered to the public; or
- At least 10% public offer, where the post-issue capital exceeded ₹4,000 crore, subject to the condition that the company would increase public shareholding to 25% within three years of listing.
This framework worked reasonably well when most IPOs were within a few thousand crore rupees. However, with the emergence of very large companies, the rule sometimes resulted in extremely large issue sizes simply to satisfy regulatory thresholds.
What the 2026 Amendment Introduces
The 2026 amendment replaces the earlier simplified framework with a tiered structure linked to the company’s post-issue capital.
Under the amended Rule 19(2)(b), the minimum public offer requirement now varies depending on the size of the company.
Revised Public Offer Requirements
| Sub-clause | Post-issue capital of the company calculated at the offer price | Minimum offer and allotment to the public |
| (i) | Less than or equal to ₹1,600 crore | At least 25% of each class or kind of equity shares or debentures convertible into equity shares issued by the company |
| (ii) | More than ₹1,600 crore but less than or equal to ₹4,000 crore | At least such percentage of each class or kind of equity shares or debentures convertible into equity shares issued by the company equivalent to the value of ₹400 crore |
| (iii) | Above ₹4,000 crore but less than or equal to ₹50,000 crore | At least 10% of each class or kind of equity shares or debentures convertible into equity shares issued by the company |
| (iv) | Above ₹50,000 crore but less than or equal to ₹1,00,000 crore | At least such percentage of each class or kind of equity shares or debentures convertible into equity shares issued by the company that is equivalent to the value of ₹1,000 crore and at least 8% of each such class or kind |
| (v) | Above ₹1,00,000 crore but less than or equal to ₹5,00,000 crore | At least such percentage of each class or kind of equity shares or debentures convertible into equity shares issued by the company that is equivalent to the value of ₹6,250 crore and at least 2.75% of each such class or kind |
| (vi) | Above ₹5,00,000 crore | At least such percentage of each class or kind of equity shares or debentures convertible into equity shares issued by the company that is equivalent to the value of ₹15,000 crore and at least 1% of each such class or kind |
| (vii) | Above ₹5,00,000 crore Operates notwithstanding sub-clause (vi) | At least 2.5% of each such class or kind of equity shares or debentures convertible into equity shares issued by the company shall be offered to the public |
| Explanation | IFSC listing carve-out | For an applicant company seeking listing on a recognised stock exchange in an International Financial Services Centre, sub-clause (i) applies, but the reference to 25% is to be read as 10%, irrespective of post-issue capital; sub-clauses (ii) to (vii) do not apply. |
The amendment therefore recognises that very large companies may not need to dilute a large percentage of equity at the time of listing, while still ensuring that a meaningful amount of shares are available in the market.
Gradual Increase in Public Shareholding
Even though companies may list with a lower public float under this framework, the law continues to require companies to increase public shareholding over time.
| Post-Issue Capital (at offer price) | Minimum Public Offer at IPO | Timeline to Increase Public Shareholding |
| Up to ₹1,600 crore | Minimum 25% public offer | Already compliant with 25% MPS |
| ₹1,600 crore – ₹4,000 crore | Public offer equivalent to ₹400 crore | Must increase to 25% public shareholding within 3 years from listing |
| ₹4,000 crore – ₹50,000 crore | Minimum 10% public offer | Must increase to 25% public shareholding within 3 years from listing |
| ₹50,000 crore – ₹1,00,000 crore | Public offer of ₹1,000 crore value and at least 8% | Must increase to 25% public shareholding within 5 years from listing |
| ₹1,00,000 crore – ₹5,00,000 crore | Public offer of ₹6,250 crore value and at least 2.75% | If public shareholding <15% at listing → 15% within 5 years and 25% within 10 years |
| Above ₹5,00,000 crore | Public offer of ₹15,000 crore value and at least 2.5% | Same as above: 15% within 5 years and 25% within 10 years |
This ensures that market liquidity and investor participation are maintained in the long run.
Practical Impact on Companies
The amendment is likely to have several practical implications for companies planning to go public.
1. Listing of large companies made easier:
For companies with very large valuations, the earlier public float framework often resulted in IPO sizes far exceeding realistic market absorption levels. Using LIC’s IPO as a reference point, a company valued at about ₹6 lakh crore would have required an issue size of nearly ₹60,000 crore if a 10% public float were mandated, which would have been difficult for the market to absorb in one transaction. The amended Rule 19 now addresses this challenge by allowing such companies to list with a minimum public offer of ₹15,000 crore and at least 1% equity, instead of a fixed percentage threshold. By introducing this value-based threshold, the amendment enables large companies to access public markets without forcing excessively large IPO sizes, while still ensuring gradual compliance with minimum public shareholding norms.
2. Greater flexibility in IPO structuring
Earlier, companies sometimes had to increase issue size simply to meet the regulatory percentage requirement.
Under the new framework, companies may be able to design more efficient IPO structures, where the issue size reflects:
- capital requirements of the company; and
- market conditions at the time of listing.
This may also allow promoters to phase dilution through future transactions, such as:
- Offer for Sale (OFS)
- Qualified Institutional Placement (QIP)
- Follow-on public offers.
3. Potential increase in large IPOs
The amendment could encourage large private companies and unicorn-stage companies to consider listing in India.
For many high-valuation companies, offering 25% at listing could translate into extremely large IPO sizes. The new framework reduces this barrier and may therefore make the Indian market more attractive for mega listings.
4. Extra Time for MPS Compliance, But Past Defaults Still Liable
Companies already listed and which were unable to achieve the prescribed minimum public shareholding (MPS) may avail the benefit of the revised timelines under the Securities Contracts (Regulation) Amendment Rules, 2026 to regularise their MPS; however, such relaxation does not absolve past non-compliances, and the stock exchanges retain the authority to impose fines or penalties for breaches occurring prior to the commencement of the amended rules.
Conclusion
The SCRR Amendment Rules, 2026 represent an important step in modernising India’s listing framework.
By introducing a graduated public offer structure, the amendment recognises the changing scale of Indian companies and the evolving nature of the IPO market.
For companies planning to list, the amendment offers greater flexibility in structuring IPOs and managing promoter dilution. For the market as a whole, it may facilitate more large-scale listings in India, while continuing to ensure sufficient public participation over time. In that sense, the amendment reflects a broader policy objective of making India a more attractive destination for large and global-scale IPOs while maintaining strong market integrity
[1] Rule 19(2) of SCRR
(b) (i) At least twenty five per cent. of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document; or
(ii) At least ten per cent of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document if the post issue capital of the company calculated at offer price is more than four thousand crore rupees:
Provided that the requirement of post issue capital being more than four thousand crore rupees shall not apply to a company whose draft offer document is pending with the Securities and Exchange Board of India on or before the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, if it satisfies the conditions prescribed in clause
(b) of sub-rule 2 of rule 19 of the Securities Contracts (Regulation) Rules, 1956 as existed prior to the date of such commencement:
Provided further that the company, referred to in sub clause (ii), shall increase its public shareholding to at least twenty five per cent, within a period of three years from the date of listing of the securities, in the manner specified by the Securities and Exchange Board of India.
(c) Notwithstanding anything contained in clause (b), a public sector company, shall offer and allot at least ten per cent, of each class or kind of equity shares or debentures convertible into equity shares to public in terms of an offer document.
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