Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018

What it does

The Regulations govern how a company raises capital from the public and the market. They set out who may make an initial public offer, a further public offer, a rights issue, a preferential issue or a qualified institutions placement, what the offer document must disclose, how the offer is priced and allotted, and what conditions attach to the money raised. They are made by the Securities and Exchange Board of India under its powers in the Securities and Exchange Board of India Act, 1992, and they replaced the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

The Regulations are organised by type of issue. One chapter deals with the initial public offer on the main board, and its eligibility test is in regulation 6. A company that passes regulation 6(1) needs net tangible assets of at least INR 3 crore in each of the preceding three full years, an average operating profit of at least INR 15 crore over those three years, and net worth of at least INR 1 crore in each of them. A company that fails it may still go to the main board under regulation 6(2) by book-building with at least seventy five per cent of the net offer allotted to qualified institutional buyers. Chapter IX deals with issues by small and medium enterprises on the SME exchange, and has no equivalent escape route.

Who it binds

Issuers of securities that make a public offer or the other kinds of issue the Regulations cover, and the merchant bankers, auditors and others who work on the offer. A company whose post-issue paid-up capital is up to INR 10 crore is routed to the SME exchange by regulation 229. Regulation 280(2) allows an issuer whose further issue is likely to take its post-issue capital beyond INR 25 crore to make that issue without migrating to the main board, provided it complies with the listing obligations regulations as they apply to main board companies.

What has changed, and when

The Regulations were notified in 2018 and have been amended often. Two amendments matter for the SME platform. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025, published in the Gazette on 4 March 2025 and in force on publication, rewrote most of Chapter IX. A further amendment on 16 March 2026 was procedural. A draft abridged prospectus now goes in with the draft offer document and not only at the final stage, and a QR code and link replace the printed abridged prospectus. The same amendment allows a depository to record securities as non-transferable where a lock-in cannot physically be created, which matters where pre-issue shares sit under a pledge.

What turns on it in practice

The capital markets practice on this site advises on public and private capital raising, listing compliance and continuing obligations. The firm's note on the SME initial public offer gate describes what the 2025 amendment changed. Regulation 229 now bars an SME issuer from filing a draft offer document unless it has earned operating profit of INR 1 crore from operations in two of the last three financial years. That moved the question from the merchant banker to the finance function, because it is an accounting test before it is a capital markets test.

The note lists the other changes. Regulation 230 caps the offer for sale at twenty per cent of the total issue size and bars a selling shareholder from selling more than fifty per cent of its holding. It caps general corporate purposes at fifteen per cent of the amount raised or INR 10 crore, whichever is lower, and prohibits an issue whose objects include repaying a loan from a promoter, the promoter group or a related party. Regulation 238 releases promoter holding above the minimum promoters' contribution in two tranches. Regulation 262 lowers the monitoring agency trigger to INR 50 crore of fresh issue. Regulation 247 puts the draft offer document in public for at least twenty one days, and new regulation 281A gives dissenting shareholders an exit where the stated objects are later varied.

The site's glossary entries on operating profit, general corporate purposes, the monitoring agency, the offer for sale and related party transactions rest on these provisions, and the tool on the SME offer-for-sale cap applies them.