SEBI has published a consultation paper dated 14 October 2026 on changes to the rules for SME IPOs in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, called the ICDR Regulations. As of 31 October 2026, nothing has changed. The paper proposes a Rs 1 lakh minimum application value, at least 500 allottees and a Rs 3 crore average operating profit test, and it asks the public for comments first.
What the consultation paper says
The paper is titled "Consultation Paper on Recommendations pursuant to Review of provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 related to Initial Public Offer by Small and Medium Enterprises". It reflects a SEBI Working Group's recommendations, reviewed by the Primary Markets Advisory Committee (PMAC) and refined by SEBI. Its data is as on 31 July 2026: 1,496 entities listed on the SME platform since inception, including 365 migrated to the Main Board, Rs 40,222 crore raised through SME IPOs, and a market capitalisation of Rs 4,70,984 crore.
| Item | Current rule (ICDR 2018) | Proposed in the paper | Status |
|---|---|---|---|
| Eligibility basis | Post-issue paid-up capital up to Rs 10 crore, and Rs 10 crore to Rs 25 crore may also issue (Regulation 229(1) and 229(2)) | Post-issue market capitalisation: up to Rs 1,000 crore SME platform only; above Rs 1,000 crore and up to Rs 4,000 crore optional | Proposal, not in force |
| Profitability | Operating profit of Rs 1 crore in at least two of the three previous years (Regulation 229(6)) | Average operating profit of at least Rs 3 crore a year over the preceding three years, restated consolidated accounts | Proposal, not in force |
| Minimum application | Two lots, above Rs 2 lakh (Regulation 267) | Two lots, each lot worth at least Rs 50,000, so a minimum of Rs 1 lakh | Proposal, not in force |
| Minimum allottees | 200 (Regulation 268) | 500 | Proposal, not in force |
| Trading lot | Lot size set by price band | One share | Proposal, not in force |
| Market making | Compulsory market making for three years (Regulation 261) | Compulsory market making omitted | Proposal, not in force |
Each row is from the paper dated 14 October 2026. The final rule can differ after comments.
Who it affects
SME companies planning an issue are the first group affected. Under the proposal, a company valued at up to Rs 1,000 crore after issue would list only on the SME platform. A company valued between Rs 1,000 crore and Rs 4,000 crore could choose either platform, with stricter financial reporting, including Ind AS where applicable. A listed SME company whose market capitalisation exceeds Rs 4,000 crore would be required to migrate to the Main Board, subject to the Main Board exchange's criteria, as the paper proposes.
Investors in SME issues would see changes in allotment. Issues we track are listed on our IPO pages. The paper proposes that each Retail Individual Investor receives at least one minimum lot, subject to availability, with the rest allotted in proportion. It also proposes one-share trading on the SME platform.
Try it: IPO Lot Size and Minimum Investment Calculator lets you pick an IPO from our database, enter the number of lots and see the amount at the upper price band, against the Rs 2,00,000 retail limit it shows for mainboard issues.
- Eligibility moves from paid-up capital to post-issue market capitalisation
- Profit test: Rs 3 crore average operating profit over three years
- Minimum application Rs 1 lakh, two lots kept
- At least 500 allottees, one-share trading, no compulsory market making
What to do
- Read the consultation paper on sebi.gov.in, starting with the questions for public comments in each section.
- Check the comment window on sebi.gov.in before it closes if you want to send views to SEBI.
- Read the red herring prospectus or prospectus of any SME issue you are looking at for its current minimum application and lot size, because the existing rules still apply.
- Count the allotment, refund and listing dates from the closing date with the IPO listing date calculator. It counts allotment at T+1, refund at T+2 and listing at T+3 working days, skipping NSE holidays.
What has not changed
The current ICDR Regulations, 2018 continue to apply until a revised regulation is notified in the Official Gazette. The paper proposes a transition: drafts filed in the three months after notification could choose either framework, and drafts filed after that would follow the revised one. As its illustration puts it, if the framework were notified on 31 December 2026, drafts filed from 1 April 2027 would mandatorily follow the revised framework.
Common mistakes
- Treating a consultation paper as a rule already in force. The 14 October 2026 paper seeks comments first.
- Quoting the Rs 1 lakh, 500 allottee or Rs 3 crore figures as current law. They are proposals in the paper.
