Securities and Exchange Board of India proposes market capitalisation-based SME IPO eligibility and halves minimum application size to ₹1 lakh

Key facts

• The Securities and Exchange Board of India (Sebi) proposed replacing paid-up capital-based SME IPO eligibility with market capitalisation thresholds, requiring companies with post-issue mcap up to ₹1,000 crore to list on the SME platform and allowing those between ₹1,000 crore and ₹4,000 crore to opt for it.
• Sebi proposed halving the minimum IPO application value from ₹2 lakh to ₹1 lakh, with each lot valued at ₹25,000, and reducing the trading lot for SME-listed securities to one share.
• Sebi proposed raising the minimum average operating profit requirement to ₹3 crore a year over the preceding three financial years, replacing the earlier requirement of ₹1 crore in two of three years; non-compliant companies could still list via book-building if at least 75 per cent of the net offer is allotted to qualified institutional buyers, failing which subscription money would be refunded.
• Sebi proposed a one-year holding requirement for shares offered for sale under a new offer-for-sale framework, rationalised promoter lock-in norms, removed the ₹10 crore cap on IPO proceeds for general corporate purposes while retaining the 15 per cent limit, and proposed changes to underwriting and compulsory market-making.
• The SME platform has raised ₹40,222 crore since inception, with 365 companies migrating to the mainboard, as per Sebi data as of July 31, 2026.
• Sebi issued the consultation paper on Wednesday and sought public comments by November 4.