SEBI proposes SME IPO eligibility based on market cap, ₹3 crore operating profit, revised allotment rules, and migration framework.
SEBI Proposes Comprehensive SME IPO Reforms
SEBI has released a consultation paper in October 2026 proposing sweeping reforms to the SME IPO framework, aimed at improving access to capital markets for small and medium enterprises. Key proposals include eligibility criteria based on market capitalization, a minimum operating profit of ₹3 crore, and standardized lock-in periods for promoters.
The consultation also introduces revisions to allotment mechanisms, recommending enhanced Qualified Institutional Buyer (QIB) participation, smaller trading lots (potentially one-share basis), and relaxed migration requirements from SME to main board exchanges. These changes are designed to improve liquidity, participation, and post-listing stability of SME issuers.
Practitioners must closely monitor the feedback period ending 4 November 2026. If adopted, these rules could significantly reshape the SME capital raising landscape, reducing fragmentation and enhancing credibility of SME listings. The move reflects SEBI’s commitment to democratizing capital market access while safeguarding investor interests.