Exchange Listing Requirements
Exchange listing requirements in India for initial public offerings (IPOs) are governed primarily by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), which prescribe eligibility criteria covering minimum post-issue paid-up capital, profitability or net tangible assets track record, minimum public offer size, and the mandatory book-building or fixed-price process for price discovery.
SEBI's ICDR Regulations 2018 replaced the earlier 2009 regulations and prescribed two primary routes for an IPO by a company seeking listing on NSE or BSE's main boards: the traditional Regulation 6 route (profitability track record) and the Regulation 6(2) route (for companies not meeting the profitability norms, typically technology or high-growth companies).
For the main board track under Regulation 6(1), the company was required to have: net tangible assets of at least Rs 3 crore in each of the three preceding full financial years, distributable profits in at least three of the immediately preceding five years (with a minimum pre-tax profit threshold), net worth of at least Rs 1 crore in each of the three preceding years, and no change in promoters or controllers in the year preceding the IPO. The post-issue face value paid-up capital requirement was Rs 10 crore, and the post-issue capital could not exceed Rs 25 crore if offered on the SME exchange platform.
For the alternative Regulation 6(2) route (available to companies not meeting profitability norms), the minimum post-issue paid-up capital was Rs 10 crore, the IPO had to be through book-building with at least 75% of the net offer to QIBs (Qualified Institutional Buyers), and alternative eligibility tests based on net tangible assets of Rs 15 crore or operating cash flows of Rs 10 crore in each of the last three years applied.
Minimum public offer requirements specified that companies with post-issue capital up to Rs 1,600 crore had to offer at least 25% of post-issue paid-up capital to the public. For larger companies, the minimum public offering was 10% with a minimum value of Rs 400 crore. The objective was ensuring adequate float for price discovery and liquidity.
The SME exchange platform (NSE Emerge and BSE SME) had significantly relaxed eligibility norms: companies with post-issue capital between Rs 1 crore and Rs 25 crore could list, subject to a minimum application amount of Rs 1 lakh (higher than the main board Rs 14,000-15,000 minimum bid lot). SME listings required a merchant banker as market maker to provide liquidity.
Listing obligations post-IPO were governed by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), which kicked in from the date of listing.