Finance Ministry has revised norms for public shareholding framework of listed companies. Experts feel such a move aims balance market liquidity with the practical realities of large capital raising.
Earlier, there were just three categories of post-issue capital – ₹1,600 crore, ₹1,600 crore to ₹4,000 crore and ₹4,000 crore to ₹1 lakh crore – for defining norms to achieve the 25 per cent minimum public shareholding. There was a special category for post-issue capital size of ₹1 lakh crore and above.
Now there will be six categories – ₹1,600 crore, ₹1,600 crore to ₹4,000 crore, ₹4,000 crore to ₹50,000 crore, ₹50,000 crore to ₹1 lakh crore, ₹1 lakh crore to ₹5 lakh crore and more than ₹5 lakh crore.
A notification by the Ministry amended the Securities Contracts (Regulation) Rules, 1957 to bring about this revision.
“By introducing a graded approach to minimum public shareholding based on post-issue capital, the government has attempted to balance market liquidity with the practical realities of large capital raises,” said Sunil Narula, Principal Lawyer, Naroola & Narula.
Adding to this, Sandeepp Jhunjhunwala, M&A Tax Partner at Nangia Global Advisors, said, “The revised framework effectively introduces additional graded public shareholding brackets for mega-cap companies seeking to list in India, thereby making the minimum public offer requirements more proportionate to very large market capitalisations.”
The time frame to achieve the minimum public shareholding of 25 per cent would be between three years and 10 years. “Provided that the timelines to achieve the public shareholding as prescribed above shall also be available to all companies listed on or before the date of commencement of the Securities Contracts (Regulation) Amendment Rules, 2026,” the notification said.
At the same time, there is reduction in equity shares or debentures convertible. “The reduction of the minimum equity/debentures convertible to equity offer from 5 per cent to 2.5 per cent coupled with a more rationalised time frame for raising public equity to 25% will be welcomed by retail investors and stock markets,” Udayan Mukerji, Senior Partner at Bonum Lex said.
Further, stock exchanges may also impose fines or penalties against any company for non-compliance with the public shareholding norms committed before the date of commencement of the revised rules. “New penalty clause would mean that recognised stock exchanges retain the authority to impose fines or penalties on listed companies, where there is a failure to maintain the mandated 25 percent minimum public shareholding, delayed dilution of promoter holdings after an IPO or merger, or non-restoration of public shareholding within prescribed timelines after corporate actions such as buybacks, delistings or promoter acquisitions, that reduced the public float below the required threshold,” Jhunjhunwala said.
Experts feel the new norms will make the market more attractive. According to Narula, the reform could make Indian markets more attractive for large issuers while preserving investor participation. “At the same time, regulators will need to ensure that the transition timelines and compliance mechanisms remain robust so that transparency and minority shareholder protection—core objectives of India’s securities regime—are not diluted,” he concluded.