By Lal Ghai & Associates | Company Secretaries | IPO Advisory Experts in India
An Initial Public Offering (IPO) is one of the most transformative milestones in a company’s growth story—marking the transition from a privately held business to a publicly listed company. Through an IPO, a company offers its shares to the general public for the first time, enabling it to raise capital, fund expansion, repay debts, and enhance brand visibility.
An IPO not only provides liquidity to existing shareholders but also increases corporate credibility and market valuation, positioning the company for long-term growth.
Understanding IPO Regulations in India
In India, the IPO process is primarily governed by the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations). These regulations outline the eligibility criteria, disclosure requirements, and procedural guidelines that every company must comply with before going public.
Compliance with SEBI ensures transparency, investor protection, and market integrity, making the Indian capital markets one of the most regulated and trustworthy in the world.
Eligibility Criteria for an IPO in India
To safeguard investors and maintain market discipline, Regulation 6 of the SEBI ICDR Regulations, 2018 specifies certain financial and operational benchmarks that a company must meet to be eligible for an IPO.
As per Regulation 6(1):
- Net Tangible Assets: The company must have net tangible assets of at least ₹3 crore in each of the preceding three full financial years.
- Net Worth: The company’s net worth should be a minimum of ₹1 crore in each of the preceding three years.
- Profitability Track Record: The company should have distributable profits for at least the immediately preceding three years.
- Average Operating Profit (AOP): A minimum average operating profit of ₹15 crore over the last three years is required.
As per Regulation 6(2):
If the company does not meet the above parameters, it can still access the IPO route through the Book Building Process—provided that Qualified Institutional Buyers (QIBs) subscribe to at least 75% of the issue. This ensures institutional confidence and investor trust in the offering.
Why SEBI’s Eligibility Norms Matter
These stringent eligibility norms are designed to ensure that only credible and financially sound companies reach the public markets. They protect investors from undue risk and uphold the integrity of India’s capital market ecosystem.
By meeting SEBI’s eligibility norms, a company not only qualifies for listing but also sends a strong signal of financial stability, corporate governance, and business maturity—key factors that attract both institutional and retail investors.
The Opportunity Ahead – From Compliance to Capital Growth
An IPO is more than a fundraising event—it is a strategic transformation. It opens the doors to:
- Enhanced brand recognition in domestic and global markets.
- Access to long-term capital for business expansion.
- Improved corporate governance and transparency.
- Liquidity for promoters and investors.
However, the journey from private to public requires meticulous planning, regulatory expertise, and compliance precision—areas where professional guidance becomes invaluable.
Your Trusted Partner in IPO Advisory – Lal Ghai & Associates
At Lal Ghai & Associates, we specialize in guiding companies through every stage of their IPO journey—from eligibility assessment and SEBI compliance to drafting offer documents and liaising with regulators.
With decades of experience as Practicing Company Secretaries and Capital Market Advisors, we ensure your IPO process is seamless, compliant, and successful.
Conclusion
While an IPO unlocks immense opportunities, it also demands strict adherence to SEBI regulations and corporate governance standards. With the right guidance, companies can transform this challenge into a gateway for sustainable growth and investor confidence.
Guiding your IPO journey with precision and expertise — Lal Ghai & Associates, Practicing Company Secretaries — your trusted partner in corporate compliance and capital market advisory.