SEBI has relaxed IPO norms for large issuers: smaller public share sale, extended timelines for minimum public shareholding. Milind Joshi CA explains what companies must do now

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SEBI Eases Minimum Public Shareholding Norms for Large IPOs: What Companies & CAs Need to Know

If you are planning an IPO, are in charge of corporate finance, or advising a company looking to list, recent changes by SEBI will be very relevant to you. On 12-13 September 2025, SEBI approved major relaxations in IPO norms, especially for large issuers, in order to ease compliance burdens, improve market participation, and enable smoother listing processes. As a Chartered Accountant, understanding these changes ensures you can guide your clients properly, avoid pitfalls, and ensure compliance.

Here’s a breakdown of what changed, what it means for companies, what CA firms like Maj Associates can help with, and how you should prepare.

What SEBI’s New IPO / Public Shareholding Norm Changes Are

  • SEBI has reduced the minimum public share sale (the portion of shares a company must offer in its IPO) for large companies: For companies with a post-listing market capitalisation above ₹5 trillion, the minimum public sale requirement has been reduced from 5% to 2.5%. Reuters+2Reuters+2

  • Timelines to meet the 25% minimum public shareholding (MPS) requirement have also been extended:

    • If the public shareholding at listing is below 15%, then companies get 5 years to reach 15%, and 10 years to reach 25%. The Times of India+2India Today+2

    • If public shareholding is 15% or more at listing, then the requirement to reach 25% must be met in 5 years. mint+1

  • SEBI has also relaxed certain norms around anchor investors, related-party transaction disclosures, and opened up more flexibility in how large IPOs are structured, especially for companies with very large market valuations. mint+1

Why These Changes Matter for Companies & CA Advisors

  • Reduced immediate dilution: Companies won’t need to offer large public share percentages right at listing, which helps promoters retain more control initially.

  • More breathing room / planning time: Extended timelines allow more time to meet MPS norms, plan investor relations, organize public float, etc.

  • Better market absorption: Smaller public sale sizes are easier for the market to absorb without causing sharp price fluctuations.

  • Regulatory compliance complexity shifts: With the new norms, companies need to plan listed status, shareholding structure, disclosures etc., more strategically; not just rush compliance from day one.

What CA Firms / Chartered Accountants Should Focus On

  • Advisory on IPO structuring: Help clients choose the right issue size, public sale percentage, structure of promoter / anchor shareholdings etc., considering these new norms.

  • Planning compliance timelines: Since the timeline to meet minimum public shareholding has been extended, CA firms need to help clients plan how to gradually comply over the allowed period.

  • Disclosures & regulatory filings: Related-party transactions disclosures, anchoring norms, continuous disclosure obligations etc. will need attention; CA must ensure financial statements, prospectus drafting, certificates etc. align with SEBI requirements.

  • Valuations, financial audits and due diligence: Before IPO, audits, internal controls, valuations etc. must be robust. With more flexibility, but also more scrutiny, CA firms have a big role to play.

  • Corporate governance & investor communication: Since public shareholding and shareholder rights become more visible, governance frameworks, transparency, and communication practices become more critical.

How Companies Should Prepare Right Now

  • Review current shareholding structure: promoter, anchor, public, related-party stakes etc.

  • Plan for incremental public shareholding compliance over the extended periods.

  • Ensure audit & financial statement readiness; early preparation for IPO prospectus, disclosures, risk factors, governance.

  • Engage a good CA early to help with all the regulatory, taxation, accounting, and compliance aspects.

  • Monitor SEBI notifications & comply with new rules as they get fully implemented.

FAQs

Q1. Do these changes mean that companies can ignore public shareholding norms at listing?
Not exactly. The norms still apply, but SEBI has given more flexibility in how much public shareholding to have initially, and more time to reach the minimum required public float.

Q2. If a company has less than 15% public shareholding at listing, what are the deadlines?
They’ll need to reach 15% public shareholding within 5 years, and 25% within 10 years. The Times of India+1

Q3. How does this affect promoters & anchor investors?
Promoters will have less pressure to dilute too much initially. Anchor investor norms have also been adjusted, more categories allowed, possibly higher overall reservation etc. CA advisors need to ensure anchor allocation and disclosures meet new rules.

Conclusion & Call To Action

SEBI’s new relaxations are significant: they offer companies more flexibility, reduce upfront burdens, and shift the way IPO planning needs to happen. But these changes also raise new challenges in regulatory compliance, disclosure, and long-term public shareholding strategy.

If you’re planning an IPO or advising one, you need the right CA support.  we can help you structure your IPO, ensure compliance with SEBI’s evolving norms, prepare prospectus financials, audits, disclosures, valuation, and lay out a strategic roadmap.

Reach out now to ensure your company is IPO-ready under the new SEBI norms.

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