Government amends minimum public offer requirements for IPOs
What's the story
The Indian government has amended the rules for minimum public offer (MPO) requirements for companies looking to list on stock exchanges. The changes, which came into effect immediately, were notified by the Ministry of Finance on March 13. The new framework introduces a tiered system based on a company's post-issue capital at the offer price.
New guidelines
For companies with post-issue capital up to ₹1,600 crore
Under the revised framework, the minimum offer and allotment to the public will depend on a company's post-issue capital at the offer price. For companies with a post-issue capital of up to ₹1,600 crore, at least 25% of each class of equity shares or convertible debentures has to be offered to the public. The source does not attribute a motive for the changes.
Increased obligations
For companies with post-issue capital exceeding ₹1,600 crore
For companies with a post-issue capital that exceeds ₹1,600 crore and is up to ₹4,000 crore, shares worth at least ₹400 crore must be offered to the public. For those with a post-issue capital above ₹4,000 crore and up to ₹50,000 crore, at least 10% of each class of equity shares or convertible debentures must be offered. These companies also have to raise their public shareholding to at least 25% within three years after listing.
Further obligations
For companies with post-issue capital above ₹50,000 crore
For companies with a post-issue capital above ₹50,000 crore and up to ₹1 lakh crore, the rules mandate a public offer worth at least ₹1,000 crore and not less than 8% of each class of equity shares or convertible debentures. These companies have to raise their public shareholding to at least 25% within five years after listing.
Stringent rules
For companies with post-issue capital above ₹1 lakh crore
For companies with a post-issue capital above ₹1 lakh crore and up to ₹5 lakh crore, shares worth at least ₹6,250 crore and not less than 2.75% of each class of securities has to be offered to the public. For those with a post-issue capital over ₹5 lakh crore, the minimum public offer has to be worth at least ₹15,000 crore and not less than 1% of each class of equity shares or convertible debentures.
Compliance deadlines
Timelines for increasing public shareholding after listing
The notification also lays down timelines for companies in the largest capital brackets to increase their public shareholding after listing. If the public shareholding at the time of listing is below 15%, such companies have to increase it to at least 15% within five years and to 25% within 10 years. If it is already 15% or more at listing, they have to reach 25% within five years.