SME IPO new rules: SEBI proposes ₹1 lakh minimum and trading in single shares
SEBI's 14 October 2026 proposal would cut the minimum SME IPO application from over ₹2 lakh to ₹1 lakh and let SME shares trade one at a time.
SEBI wants to change how IPOs of small and medium companies (SME IPOs) work. It published a consultation paper on 14 October 2026 with a long list of proposals. Nothing has changed yet. Here is what is proposed, and what it would mean if you apply for SME IPOs or hold SME shares.
SME IPOs list on the SME platforms of NSE and BSE (NSE Emerge and BSE SME). Big IPOs such as Jio Platforms list on the main board and are not covered by this paper.
How much you need to apply
Today, an SME IPO application must be for at least two lots, and the minimum application has to be worth more than ₹2 lakh. SEBI raised it to this level in March 2025 to keep smaller investors away from riskier SME issues.
Proposed: the minimum application would be ₹1 lakh. You would apply for at least 4 lots, and each lot would be worth at least ₹25,000. Further bids would be in multiples of one lot.
SEBI says the lower amount is safer now because the proposals also tighten the rules for companies, add more disclosure and raise the minimum number of investors in each issue.
Trading after listing
Today, SME shares trade in fixed lots, so you may need lakhs of rupees to buy or sell even one lot.
Proposed: the trading lot for SME shares would be one share. You could buy a few shares, or sell part of what you hold, as you can with main board shares. The Economic Times reported that this would replace the current lot sizes based on the share price.
Other changes in the paper
- At least 500 allottees. An SME IPO would need to allot shares to at least 500 investors, up from 200. Retail investors would still get at least one minimum lot each, if there are enough shares, as reported by The Economic Times.
- No compulsory market maker. SEBI proposed dropping the rule that a market maker must quote prices in every SME share, as on the main board.
- Price band. In a book-built issue, the top of the price band would have to be at least 105% of the floor price, and not more than 120%.
- Stricter test for companies. SEBI proposed a higher operating profit test for companies that want an SME listing, with a separate route for companies that do not meet it, where at least 75% of the offer goes to institutional investors.
- Limits on sellers. The offer for sale part would stay capped at 20% of the issue, and money for general corporate purposes at 15% of the amount raised.
When it could start
Not yet. SEBI is taking public comments until 4 November 2026, as reported by The Economic Times and Kotak Neo. After that its board has to approve the final rules and they have to be notified. No start date has been given. Until then, the current minimum of more than ₹2 lakh and the current trading lots apply.
IndMoney reported that the paper lets companies that have already filed their final offer document stay under the old rules.
What it means for you
- If you apply for SME IPOs, you may later be able to apply with ₹1 lakh instead of more than ₹2 lakh.
- If you hold SME shares, selling a small part of your holding would become easier.
- SME companies are small, and their shares can be hard to sell and can move sharply in price. A lower entry amount does not make them safer. Read the offer document before you apply.
You can track open and upcoming IPOs on our IPO calendar and check results on the IPO allotment status page.
Before you decide
Saifu is not a SEBI-registered investment adviser. This guide explains a proposed market rule. It is not advice to apply for any IPO or to buy or sell shares. Investments in shares are subject to market risk.
Sources: SEBI: Consultation paper on IPOs by small and medium enterprises, 14 October 2026, SEBI: consultation paper (PDF), ET Legal World (PTI): Sebi mulls major overhaul of SME IPO framework, Kotak Neo: SEBI proposes SME IPO rules to cut minimum application to ₹1 lakh, IndMoney: SEBI SME IPO rule changes explained.
Rules, rates and limits change. Check the official source linked above before you rely on a figure here. Posts never contain referral or affiliate links from the writer.
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