SEBI has proposed sweeping reforms to the SME IPO regime, introducing market-cap-based eligibility, a ₹3 crore operating profit criterion, reduced application size to ₹1 lakh, and revised migration rules to mainboard.
SEBI Proposes Overhaul of SME IPO Framework
In October 2026, SEBI unveiled comprehensive proposals to reform the SME IPO ecosystem, aiming to improve investor protection and market quality. Key suggestions include replacing net worth with average market capitalisation as the primary eligibility metric, mandating a minimum ₹3 crore operating profit before depreciation and tax, and lowering the minimum application size to ₹1 lakh to enhance accessibility.
The consultation paper also proposes one-share trading lots to increase liquidity and revises the migration criteria from the SME to the mainboard, including enhanced disclosure and governance standards. SEBI seeks public comments by 4 November 2026 on these proposals, which are expected to reshape the entry-level public markets for small businesses.
These reforms signal SEBI’s intent to professionalise the SME segment, curb speculative listings, and ensure capital is raised only by financially sound entities. Practitioners must prepare clients for tighter scrutiny and stronger compliance requirements in upcoming SME offerings.
