Inside SEBI’s 10 Key Proposed Changes To SME IPO Rules

The Securities and Exchange Board of India (SEBI) has unveiled a plan to overhaul the rules governing initial public offerings (IPOs) for small and medium enterprises (SMEs). The markets regulator has proposed revisions to valuation thresholds, profitability standards, and shareholder exit options in a consultation paper released on October 14.

The proposal aims to accommodate the surge in funds raised through SME IPOs and the growing number of investors participating in these offerings. Since its inception in 2012, the SME platform has witnessed nearly 1,500 companies raising ₹40,222 crore in combined IPO proceeds. Among the key changes proposed by SEBI are the adoption of market capitalisation-based listing criteria, lowering the minimum application threshold, and eliminating mandatory underwriting and market-making requirements.

Other proposed adjustments include mandating a minimum post-issue operating profit of ₹3 crore annually for three consecutive years, removing a cap on general corporate purposes allocations, and revising lock-in periods for promoters and other shareholders. SEBI is seeking public feedback on the proposed changes until November 4.