SEBI May Relax IPO Validity Period, MPS Rules Owing to Poor Market Conditions

It has been reported by Moneycontrol that the Securities and Exchange Board of India (SEBI) is mulling over granting an extension to the IPO validity period, along with relaxation of minimum public shareholding (MPS) norms.

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Currently, SEBI’s observation letter for an initial public offering (IPO) remains valid for 12 months. If it expires, companies must refile documents to proceed. Sources cited by Moneycontrol indicate that SEBI may grant an extension of around six months as a one-time relief measure, similar to steps taken during the COVID-19 period in 2020.

IPO Pipeline Faces Delays

The extension is proposed against the backdrop of some firms that have been cleared for an IPO nearing expiry deadlines. As per reports from Moneycontrol, companies like Veritas Finance, Credila Financial, Hero FinCorp, Greaves Electric Mobility, and Dorf-Ketal Chemicals have been granted clearance from April to June 2025 and might soon lapse due to expiry issues.

All these companies have scheduled the size of the issue between ₹1,000 crore and ₹5,000 crore, but due to weak investor confidence and lack of demand, their launch has been delayed.

Industry participants have sought a longer extension of up to 12 months for observation letters expiring between February 15, 2026 and December 31, 2026. They have also requested flexibility to revise issue sizes without requiring a fresh filing, according to Moneycontrol.

Relief Measures Under Consideration

The regulatory authority will also consider applications for relaxing requirements for minimum public shareholding standards. Companies have requested a one-time 12-month extension for meeting MPS requirements for deadlines falling within the same February–December 2026 period.

According to Moneycontrol, industry stakeholders have also proposed allowing alternative routes, such as preferential allotments and block trades without caps, to help promoters dilute stakes more efficiently.

SEBI had earlier amended rules to extend MPS compliance timelines for companies with market capitalisation above ₹50,000 crore to up to 5–10 years post-listing. Industry bodies have now requested that eligibility for such benefits be linked to market capitalisation as of March 13, 2026.

Regulatory Process And Next Steps

The proposed measures may require regulatory amendments and approval from SEBI’s board after a public consultation process. Moneycontrol mentioned certain sources which said that only such cases as those where there was a compliance problem would qualify.

This possibility of extending the validity period of an IPO and relaxing the criteria on minimum public shareholding is one of the measures being taken to deal with problems related to the delay in raising capital.