Quick Summary
The Securities and Exchange Board of India (SEBI) has proposed a series of changes to the regulatory framework for initial public offerings (IPOs) by small and medium enterprises (SMEs). The proposals cover eligibility conditions, profitability requirements, investor allotment, trading lot sizes and other aspects of SME listings. SEBI issued a consultation paper on October 14, 2026, seeking public feedback on recommendations to review the provisions of the SEBI (Issue of Capital and Disclosure
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FAQ :
SEBI is proposing several changes to SME IPO rules, including revising eligibility criteria, increasing the minimum average operating profit to £3 crore, reducing the trading lot to one share, and potentially increasing the minimum number of allottees to 500.
Eligibility for the SME platform may shift from being based on post-issue paid-up capital to post-issue market capitalisation. Companies with a market capitalisation up to £4,000 crore could opt for the SME platform, while those exceeding this would need to follow the Main Board IPO framework.
SEBI proposes increasing the minimum average operating profit requirement from the current £1 crore (in two of the last three years) to an average of £3 crore per year over the preceding three financial years, calculated using restated and consolidated financial statements.
A significant proposal is to reduce the trading lot size for SME-listed shares to one share in the secondary market, which aims to improve flexibility for investors and address odd-lot holdings.
SEBI is seeking feedback on increasing the minimum number of allottees in an SME IPO from the current 200 to 500.
No, these are proposals currently open for public consultation. SEBI will consider the feedback received before making any final decisions and implementing regulatory changes.
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