Question 1

All listed companies must maintain a strict 25% public shareholding immediately upon listing.

Accepted Answer

Companies are allowed to list with a lower public float (Minimum Public Offer) and are given a staggered glide path to achieve the 25% Minimum Public Shareholding (MPS), now extended up to 10 years for mega-cap issuers.

Question 2

Real Estate Investment Trusts (REITs) are classified as debt or hybrid instruments for mutual fund investments.

Accepted Answer

In its 211th board meeting, SEBI explicitly reclassified REITs as equity instruments for mutual fund investments.

Question 3

Consider the following statements regarding the capital market reforms approved in SEBI's 211th Board Meeting (September 2025): 
1. The timeline for mega-cap issuers (above Rs 1 lakh crore market cap) to achieve the 25% Minimum Public Shareholding (MPS) has been extended up to 10 years.
2. The minimum retail investor quota in public issues has been reduced from 35% to 25% to accommodate more Qualified Institutional Buyers.
3. Real Estate Investment Trusts (REITs) have been reclassified as equity instruments for mutual fund investments.
How many of the above statements are correct?

Accepted Answer

(b) Only two — Statement 1 is correct: SEBI has allowed mega-cap issuers up to 10 years to reach the 25% MPS target to prevent supply shocks. Statement 2 is incorrect: SEBI initially proposed reducing the retail quota to 25% but dropped the proposal, retaining the 35% retail allocation in IPOs. Statement 3 is correct: REITs were reclassified as equity instruments to allow greater mutual fund exposure.

Question 4

Match the following regulatory changes approved by SEBI with their respective domains:
List I (Change)
A. India Market Access portal
B. Exit load capped at 3%
C. Large Value Fund (LVF) threshold cut to Rs 25 crore
D. 40% quota reservation
List II (Domain)
1. Alternative Investment Funds (AIFs)
2. Initial Public Offerings (Anchor Investors)
3. Foreign Portfolio Investors (FPIs)
4. Mutual Funds
Select the correct code:

Accepted Answer

(a) A-3, B-4, C-1, D-2 — A matches 3: 'India Market Access' is a single-window portal launched for FPIs. B matches 4: SEBI capped mutual fund exit loads at 3% (down from 5%). C matches 1: The minimum investment threshold for LVFs under AIFs was reduced to Rs 25 crore. D matches 2: The anchor investor quota in IPOs was increased to 40% to include pension funds and insurers.

Question 5

Assertion (A): SEBI lowered the Minimum Public Offer (MPO) thresholds and extended the Minimum Public Shareholding (MPS) compliance timeline for mega-cap companies.
Reason (R): Forcing mega-cap companies to release 25% of their equity immediately upon listing creates an oversupply of shares, depressing secondary market valuations and deterring large domestic listings.
Select the correct answer from the codes given below:

Accepted Answer

(a) Both A and R are true and R is the correct explanation of A. — Both statements are correct. The core rationale behind the amendment to the Securities Contracts (Regulation) Rules (SCRR) is to allow large issuers to list with a smaller initial float and give them up to 10 years to reach the 25% threshold. This is explicitly designed to prevent dumping huge volumes of shares simultaneously, which disrupts market equilibrium.

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