Updated Rules for SME IPOs - What Investors Need to Know from July 1, 2025
The stock exchanges have introduced new rules for Small and Medium Enterprises (SME) Initial Public Offerings (IPOs), effective from July 1, 2025. These updates aim to make the bidding process more transparent, efficient, and investor-friendly in the SME segment.
Here’s a breakdown of what’s changing:
Key Changes in SME IPO Eligibility and Bidding
- Individual Investors
- The previous “Retail Individual Investor” category is now replaced with Individual Investor.
- Investors can apply for at least 2 lots, with a minimum application of ₹2 lakh.
- There is no maximum limit for applications.
- The previous “Retail Individual Investor” category is now replaced with Individual Investor.
- Institutional Investors
- Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) must apply for more than 2 lots.
- Minimum application starts at ₹2 lakh, with no upper limit.
- Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) must apply for more than 2 lots.
- Bidding Process Updates
- Bids at cut-off price are no longer allowed for any category.
- Modifications or cancellations of bids are not permitted.
- On the last day of the IPO, the bidding window for all categories closes at 4:00 PM.
- Bids at cut-off price are no longer allowed for any category.
Changes for Reserved Categories
- Employees: Minimum 2 lots, application above ₹2 lakh, in multiples not exceeding ₹5 lakh.
Shareholders & Policyholders: Minimum 2 lots, application above ₹2 lakh, maximum ₹5 lakh.
| Investor Category | Minimum Application | Maximum Application | Key Update |
| Individual Investor (New) | ≥ 2 lots (> ₹2 lakh) | No limit | Replaces Retail Individual Investor |
| Employees / Shareholders/Policyholders | ≥ 2 lots (> ₹2 lakh) | ≤ ₹5 lakh | Must bid for more than 2 lots |
| NIIs / QIBs | ≥ 2 lots (> ₹2 lakh) | No limit | Must bid for more than 2 lots |
Important Transition Note
- SME IPOs opening on or before June 30, 2025, can follow the existing or new bidding process.
- Any spillover from these IPOs will continue up to July 11, 2025.
- From July 1, 2025, all new SME IPOs must follow the updated bidding rules.
These changes simplify the SME IPO process while maintaining fairness across all investor categories.