New Regulatory Framework for SME IPOs

In a significant move to protect investor interests, the Securities and Exchange Board of India (Sebi) has announced a stricter regulatory framework for small and medium enterprise (SME) initial public offerings (IPOs). This includes introducing a profitability requirement and capping the offer-for-sale (OFS) at 20%.

Objective of the Reforms

The primary aim of these reforms is to provide SMEs with a robust track record the opportunity to raise funds from the public. This initiative comes in response to the increasing number of SME issues, which have seen significant investor participation.

Impact on the Market

By setting these new norms, Sebi intends to ensure that only those SMEs with a proven record of profitability and stability can access public funds, thereby safeguarding the interests of investors and maintaining the integrity of the market.