Home / Business and Economy / SEBI Overhauls SME IPO Rules: Big Changes Ahead
SEBI Overhauls SME IPO Rules: Big Changes Ahead
14 Oct
Summary
- SEBI proposes ₹3 crore average operating profit for SME IPOs.
- Minimum application value slashed to ₹1 lakh from over ₹2 lakh.
- Market making, underwriting rules changed; lock-ins shortened.
The Securities and Exchange Board of India (SEBI) has introduced sweeping proposed changes to the SME IPO framework. A key amendment is the increase in the average annual operating profit requirement to ₹3 crore over the preceding three years. This aims to rationalize the eligibility criteria for Small and Medium Enterprise Initial Public Offerings.
Further proposals include reducing the minimum application value to ₹1 lakh and shortening various lock-in periods for shares. SEBI is also considering removing compulsory market making and amending underwriting obligations to align more closely with mainboard regulations.
Issuers not meeting the profit threshold may use an alternative route requiring at least 75% allocation to Qualified Institutional Buyers (QIBs). Eligibility criteria are shifting from paid-up capital to market capitalization thresholds, with companies above ₹4,000 crore market cap needing to refile under the mainboard framework.
These proposed amendments, detailed in a consultation paper released on October 14, 2026, are open for public comments until November 4, 2026. The regulator intends to enhance investor safeguards while making the SME platform more accessible.
