By Jayshree P Upadhyay <\/p>\n
MUMBAI, Aug 28 (Reuters) – India’s markets regulator is considering applying some rules designed for large companies to public offers by smaller businesses, including a quota for institutional investors ahead of share sales, two sources with direct \u200cknowledge of the matter said. <\/p>\n
The regulator is also mulling raising the limit on the size of companies that can list \u200con platforms dedicated to small firms and mandating larger operating profit requirements before listing, the sources, who did not want to be named as the discussions are \u200bprivate, said. <\/p>\n
The potential change in rules comes after regulatory warnings about small businesses diverting funds raised from public markets and an investigation into investment banks extracting unusually high fees and juicing subscription numbers. They also echo regional trends as Hong Kong’s exchange questions the need for a junior market. <\/p>\n
In India, small businesses with paid-up capital of up to 1 billion rupees ($10.5 million) cab list on separate sections of the BSE and National \u200cStock Exchange of India. These have fewer disclosure \u2060requirements and offerings are vetted by the exchanges as opposed to large IPOs which have to be cleared by the Securities and Exchange Board of India. \u00a0POTENTIAL CHANGESAn email query sent to SEBI was not answered. \u2060Earlier this month, SEBI chief Tuhin Kanta Pandey had said that the small business listing platform rules were being reviewed. <\/p>\n
Going forward, up to 50% of small companies’ share issues could be reserved for qualified institutional buyers, the sources said, with 35% kept aside for retail investors and 15% for non-institutional \u200binvestors, \u200bsimilar to the case with mainboard companies. <\/p>\n
As much as 60% of the \u200bqualified institutional portion could be kept aside for anchor \u200cinvestors who commit capital before an offering opens more broadly, they added. <\/p>\n
Firms can list on the platforms if they have reported an average profit of at least 30 million rupees ($313,938) over the past three years, as per another proposal, higher than the current threshold of 10 billion rupees in at least two of the past three years, the sources said. <\/p>\n
Moreover, the post issue capital requirement could be replaced by post issue market capitalisation of 10 billion rupees to 40 billion rupees, the sources said. <\/p>\n
Details of plans on increasing institutional participation in \u200cSME IPOs have not been reported previously. <\/p>\n
An offer-for-sale framework to allow existing investors \u200bto exit during the public offer is also being considered, one of the sources \u200bsaid, in a move that could shorten the lock-in \u200bfor pre-IPO shareholders to six months from one year. <\/p>\n
India is considering allowing trading in single shares against the \u200ccurrent requirement of 200,000 rupees, one of the sources \u200bsaid. <\/p>\n
FRESH RISKS <\/p>\n
Small firms raised $1.2 billion through \u200bmore than 250 offerings last year and have added less than half that amount through about 100 offerings so far in 2026. Large companies have raised about 17 times that amount this year. <\/p>\n
Kosturi Ghosh, a partner at Trilegal, says that expanding the \u200bplatform’s scope could create fresh risks. <\/p>\n
“The segment \u200chas not exactly been the poster child for governance. Allowing a larger-size company to choose between the SME segment and \u200bthe main board to play the regulatory arbitrage is a dangerous proposition.” <\/p>\n
($1 = 95.5600 Indian rupees) <\/p>\n
(Reporting by Jayshree P Upadhyay, \u200badditional reporting by Vibhuti Sharma in Mumbai; Editing by Ronojoy Mazumdar) <\/p>\n","protected":false},"excerpt":{"rendered":"By Jayshree P Upadhyay MUMBAI, Aug 28 (Reuters) – India’s markets regulator is considering applying some rules designed…\n","protected":false},"author":2,"featured_media":871411,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,439896,35664,74093,102587],"class_list":["post-871410","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy","tag-jayshree-p-upadhyay-mumbai","tag-platform","tag-reuters","tag-said"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/871410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=871410"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/871410\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/871411"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=871410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=871410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=871410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}