Large-cap issuers get longer timelines to meet minimum public shareholding
Anchor norms expanded to insurers and pension funds.
Retail FPI access eased, REITs reclassified as equity for MF investments, and LVF thresholds lowered.
India’s capital markets regulator has set the stage for more flexible stock market listings, particularly for the country’s biggest initial public offerings. The Securities and Exchange Board of India (Sebi) has approved sweeping reforms to public offer norms, with a strong focus on easing compliance and widening participation across investor groups.
At the heart of the changes is a reworking of the minimum public shareholding (MPS) rule. Companies valued at over ₹1 lakh crore will now be allowed to list with a smaller free float, provided they gradually raise it over time.
Firms debuting with less than 15% public shareholding will need to raise this to 15% within five years and to 25% within ten years. Those starting with 15% or more will have five years to reach the 25% threshold. The same timelines will apply to India’s largest issuers, with market capitalisations above ₹5 lakh crore.
The regulator also sought to open up anchor investor allocations, expanding the pool beyond mutual funds to include life insurers and pension funds. Anchor allocations have been increased to 40% of the issue size, with a third earmarked for mutual funds and the remainder for long-term institutions. Sebi has also relaxed the cap on the number of anchor allottees, giving global investors managing multiple funds greater leeway.
The broader package of reforms also simplifies related-party transaction rules, reduces exit loads for mutual funds, lower entry barriers for alternative investment funds, and expands foreign investor access through the IFSC framework. By reclassifying REITs as equity instruments for mutual fund investment, Sebi is also pushing these financial vehicles closer to mainstream equity indices.
Taken together, these moves signal Sebi's attempt to balance ease of doing business with investor protection, at a time when global capital flows are shifting and India wants to keep its markets attractive. For investors, it could mean more opportunities to participate in India’s biggest listings, while issuers gain flexibility in how they bring their shares to market.
