Government Amends Securities Contracts Rules to Revise Minimum Public Shareholding Norms

The Ministry of Finance has notified amendments to the Securities Contracts (Regulation) Rules, 1957, revising the framework for minimum public shareholding and public offer requirements for companies seeking listing on stock exchanges. The changes were introduced through the Securities Contracts (Regulation) Amendment Rules, 2026, issued under powers granted by the Securities Contracts (Regulation) Act, 1956.

The amended rules were published in the Gazette of India on March 13, 2026 and came into force immediately upon publication.

Revised Minimum Public Offer Requirements

Under the amended Rule 19(2)(b), the government has introduced a graded structure for minimum public offer and allotment , depending on a company’s post-issue capital calculated at the offer price.

Key provisions include:

• Companies with post-issue capital up to Rs 1,600 crore must offer at least 25% of each class of equity shares or convertible debentures to the public.
• Companies with post-issue capital between Rs 1,600 crore and Rs 4,000 crore must offer shares to the public equivalent to Rs 400 crore in value.
• Companies with capital above Rs 4,000 crore but up to Rs 50,000 crore must offer a minimum of 10% of each class of securities to the public.
• Companies with capital above Rs 50,000 crore but up to Rs 1 lakh crore must offer securities equivalent to Rs 1,000 crore in value and at least 8% of each class .
• Companies with capital above Rs 1 lakh crore but up to Rs 5 lakh crore must offer securities worth Rs 6,250 crore and at least 2.75% of each class.
• Companies with capital exceeding Rs 5 lakh crore must offer securities worth Rs 15,000 crore and at least 1% of each class.

Timeline to Achieve 25% Public Shareholding

The notification also prescribes timelines for companies to achieve the standard 25% public shareholding requirement, with compliance to be monitored by the Securities and Exchange Board of India.

• Companies under certain categories must reach 25% public shareholding within three years of listing.
• Large companies may get up to five years to meet the threshold.
• In cases where the initial public shareholding is below 15%, companies must first raise it to 15% within five years and 25% within ten years.

Additional Provisions for Listed Companies

The amendment clarifies that:

• The new compliance timelines will also apply to companies already listed before the amendment’s commencement.
• Companies issuing superior voting rights shares to promoters or founders must list those shares on the same recognised stock exchange along with ordinary shares offered to the public.
• Recognised stock exchanges may impose penalties or fines for past non-compliance with public shareholding norms.

Special Provision for IFSC Listings

The rules also provide a special relaxation for companies seeking listing in International Financial Service Centres (IFSCs). Such companies may list securities with a minimum public shareholding of 10% , irrespective of post-issue capital.

Objective of the Amendment

The government’s move is aimed at providing greater flexibility for large companies planning public listings while ensuring gradual compliance with public shareholding norms. The graded framework is expected to facilitate capital market access for high-value issuers while maintaining adequate public participation in listed companies.