The Government of India has introduced new rules for minimum public shareholding (MPS) for large companies planning to launch an Initial Public Offering.
The updated rules allow very large companies to offer a smaller portion of shares to the public at the time of listing and then gradually increase their public shareholding over time.
The aim is to make it easier for large firms to go public while still ensuring that public investors eventually hold at least 25 percent of the company’s shares.
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Under the new framework, the minimum shares offered to the public will depend on the company’s total capital after the IPO.
Companies with post-issue capital up to ₹1,600 crore must still follow the current rule and offer at least 25 percent of their shares to the public at the time of listing.
However, for larger companies, the government has introduced a tiered system that allows smaller initial public offerings with gradual increases later.
For example:
Companies with capital between ₹1,600 crore and ₹4,000 crore must offer shares worth at least ₹400 crore to the public.
Firms with capital between ₹4,000 crore and ₹50,000 crore must offer at least 10 percent shares at listing and increase public shareholding to 25 percent within three years.
These staged increases will follow guidelines issued by the Securities and Exchange Board of India.
Special Rules for Very Large Companies
The rules become more flexible for extremely large companies with massive valuations.
Companies with capital between ₹50,000 crore and ₹1 lakh crore must offer shares worth at least ₹1,000 crore and at least 8 percent public shareholding at listing.
Companies with capital between ₹1 lakh crore and ₹5 lakh crore must offer shares worth ₹6,250 crore and maintain 2.75 percent public shareholding at listing.
Firms with capital above ₹5 lakh crore must offer shares worth at least ₹15,000 crore and maintain 1 percent public shareholding at listing.
Even with these relaxed initial requirements, companies must gradually increase their public shareholding over time.
Gradual Increase to 25 Percent Public Holding
According to the new rules, if a company lists with less than 15 percent public shareholding, it must increase that level to at least 15 percent within five years.
After that, the company must further raise public shareholding to 25 percent within ten years of listing.
The government has also clarified that every company must offer at least 2.5 percent of each class of equity or convertible securities to the public, regardless of its size.
Why the Government Changed the Rules
The new rules were introduced through the Securities Contracts (Regulation) Amendment Rules 2026 by the Ministry of Finance under the Securities Contracts (Regulation) Act 1956.
The goal is to encourage large companies to list on Indian stock exchanges without forcing them to immediately dilute a large portion of their ownership.
By allowing staged increases in public shareholding, the government hopes to attract more big companies to the stock market while protecting investor participation over time.