India’s securities watchdog proposed sweeping changes to rules governing the listing and trading of small companies, seeking to ease access to capital markets and broaden investor participation. Firms with a market value of as much as 10 billion rupees ($105 million) will use the small- and medium-enterprise platforms for initial public offerings, according to a Securities and Exchange Board of India consultation paper released Wednesday. Those valued at more than 10 billion rupees to as much as 40 billion rupees would be allowed to choose between the venue for micro listings and the main board. The regulator is attempting one of the biggest overhauls of India’s market for tiny listings since the dedicated platforms were introduced in 2012.
The proposals come as fundraising via initial share sales booms. Close to 180 companies have gone public on the SME platform so far this year after a record 267 in all of 2025, according to Prime Database. Still, greater access will put the spotlight on the quality of companies coming to market. Micro caps have faced concerns over governance, disclosures and alleged diversion of funds. The regulator proposed tougher eligibility standards. Tiny issuers would need an average operating profit of at least 30 million rupees annually over the preceding three fiscal years, against the current requirement of 10 million rupees in at least two of the previous three years. This will ensure that such companies demonstrate reasonable and sustained operating profitability, SEBI said.
Firms that fail the profitability test will be allowed to list if at least 75% of the net offer is allotted to qualified institutional buyers. SEBI proposed halving the minimum application size to 100,000 rupees and allowing investors to trade a single share after listing, down from as many as 10,000, to broaden participation. It also seeks to scrap the market-making and underwriting requirements to reduce IPO costs for smaller companies. About 1,496 firms have listed on SME platforms since their inception, raising a combined 402.2 billion rupees through IPOs, according to the paper.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing