Big government decision: changes in IPO rules; Easy listing of ‘these’ companies on stock market, a relief for NSE and Jio
- Easy way for big companies to list in stock market
- Amendments to IPO related regulations by Govt
- What changes under the new rules?
IPO Rules Change: The way to get listed on the stock market for big companies in India is now easier than ever. The government amended the IPO rules to allow companies with a post-listing market capitalization of more than ₹5 lakh crore to sell only 2.5 per cent of their paid-up capital to the public.
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In the past, many large companies were struggling. Let’s know what changes have been made under the new rules.
1. Under the new rules, companies are required to reserve at least 2.5 percent of each equity share class for public investors. The government has also set a time frame for gradually increasing public shareholding to increase investor participation in the market.
2. Under the new rules, if a company’s public shareholding is less than 15 percent at the time of listing, it will have to raise it to 15 percent in 5 years and 25 percent in 10 years. So, companies whose public shareholding is more than 15 percent at the time of IPO will be mandated to increase it to 25 percent in the next 5 years.
3. The government has established different rules for public shareholding based on the market capitalization of the companies. Companies with a market capitalization between ₹1 lakh crore and ₹5 lakh crore should offer at least 2.75 percent of their shares to public investors during the IPO.
4. For companies smaller than this size, the percentage of public shareholding is set higher.For example, companies with a market capitalization between ₹50,000 crore and ₹1 lakh crore must issue at least 8% of their shares to the public to maintain investor participation in the market.
5. The new rules also state that if a company has equity shares with Superior Voting Rights (SVR) and wants to list its ordinary shares on a stock exchange, such SVR shares will also need to be listed.
Road made easy for NSE and Reliance JIO
The government has officially implemented these new rules. Experts believe that this move could increase the chances of IPOs by several large companies. Especially for companies like National Stock Exchange and Reliance Jio, the path to listing in the stock market is considered easy.
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