Eligibility Criteria to Apply for an IPO

Through an Initial Public Offering (IPO), a company can raise capital from the public. Generally, companies initiate the IPO process to fund their existing operations and new ventures. As an investor, you can be part of this journey, and get involved as the company goes public.

 

However, to become publicly listed, a company must follow the IPO application process mandated by the Securities and Exchange Board of India (SEBI). Moreover, the company will also have to comply with the NSE regulations. 

 

Similarly, to invest, you need to meet certain criteria set by SEBI. Read on to know more about how to apply for an IPO and the eligibility criteria for an IPO application in India. 

The eligibility criteria for IPO investors are as follows:

• You should be above the age of 18 years

• You should have a valid PAN

• You should have a Demat account and trading account (if you want to sell)

• You should have a bank account with sufficient balance and internet banking

Applications Supported by Blocked Amounts (ASBA)

• For the convenience of investors, SEBI has brought in the facility called the Applications Supported by Blocked Amounts (ASBA).

• With ASBA IPOs, money is not debited from the investor’s amount till the time of allotment.

• Under this facility, the designated amount is blocked in your account upon IPO application. 

• On the allotment date, the amount from your account will be debited based on the volume of shares allotted to you.

 

Additionally, like investors, companies issuing IPOs also need to meet certain eligibility criteria for IPO investment. 

The following are National Stock Exchange (NSE) regulations that a company will have to comply with to meet eligibility for the IPO application.

• The paid-up capital of the company in the previous year must be over ₹10 Crores

• The capitalisation of the company’s equity should at least be ₹25 Crores

• The company should have adhered to the Securities Contracts (Regulations) Act 1956, Companies Act 1956/2013, and Securities and Exchange Board of India Act 1992

• The company should submit financial proceedings for the previous 3 years 

• The company (applicant) must complete the cooling-off period of 6 months after rejection before reapplying 

 

Retail and institutional investors can invest in IPOs through the primary market. Moreover, through the IPO process, investors can leverage the company's growth potential to earn better returns. 

 

To find investment options as per your risk-tolerance, visit Bajaj Markets. The digital platform simplifies access to mutual funds, FDs, and various other investments.