SEBI proposes new SME IPO rules and debt security amendments

The Securities and Exchange Board of India (SEBI) has introduced new regulatory proposals and amendments affecting market listings.

SEBI has issued a consultation paper proposing significant changes to the rules for Small and Medium Enterprise (SME) Initial Public Offerings (IPOs) slated for 2026. The proposed revisions aim to make the listing process more proportionate to business maturity and reduce compliance burdens. Key suggestions include increasing the minimum average operating profit requirement to Rs 3 crore, potentially linking eligibility to market capitalization, reducing trading lot sizes to a single share, and raising the minimum number of allottees to 500. SEBI is also considering the removal of compulsory market-making requirements.

Additionally, SEBI has notified amendments to the Listing Obligations and Disclosure Requirements (LODR) Regulations regarding non-convertible debt securities. Under the amended Regulation 62A, listed entities will be required to list all subsequent issuances of non-convertible debt securities on stock exchanges. This mandatory requirement applies to debt securities issued after the publication of the amendment in the Official Gazette.