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Investing

Shareholder Quota in an IPO: Who Qualifies and How to Apply

An IPO shareholder quota is for public shareholders of a listed parent on the RHP's cut-off date. Bid up to ₹2 lakh there and also as retail.

AI

Written by Ananya Iyer

Published 7 October 2026·6 min read

On this page8 sections
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A shareholder quota is a slice of an IPO kept for public shareholders of the company’s listed parent or listed subsidiary. You qualify only if you hold those listed shares on the cut-off date in the offer document, which is usually the date of the red herring prospectus (RHP). A small eligible shareholder can bid up to ₹2 lakh in the quota and also bid in the retail category.

Key facts

Item Rule
Legal basis Regulation 33, SEBI (ICDR) Regulations, 2018
Who it can be for Shareholders, other than promoters and promoter group, of listed subsidiaries or listed promoter companies
Maximum size 10% of the issue size
Eligibility date Set in the RHP; recent RHPs use the RHP date itself
Minimum holding No minimum in the rules; the RHP defines who is eligible
Bid in quota and retail Allowed if the quota bid is up to ₹2 lakh
Quota bid above ₹2 lakh Allowed, but then you cannot bid in the net offer and cannot use the cut-off price
Allotment in the quota Proportionate

For the basics of how a public issue works, see what an IPO is. This page deals only with the shareholder category.

What the shareholder reservation is

Regulation 33 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 lets an issuer reserve shares “on a competitive basis” for two groups: its employees, and shareholders of its listed subsidiaries or listed promoter companies. Promoters and the promoter group are excluded. The shareholder reservation cannot exceed 10% of the issue size.

The quota is carved out of the issue before the net offer is split among retail, non-institutional and institutional investors. Any unsubscribed part can be moved to other reserved categories and then to the net offer.

Two recent examples:

  • Bajaj Housing Finance (September 2024) reserved up to ₹500 crore for “Eligible Shareholders”, defined as public shareholders of its promoters.
  • Central Mine Planning & Design Institute (March 2026), a Coal India subsidiary, reserved shares worth ₹184.21 crore for Coal India shareholders, according to Upstox.

Jio Platforms’ draft offer document also proposes a quota for eligible Reliance Industries shareholders. Our Jio IPO page tracks that issue; who qualifies will be known only when its RHP is filed.

Eligibility date and holding rules

The ICDR Regulations do not fix the date. Each RHP does. Bajaj Housing Finance’s RHP, dated 30 August 2024, said only eligible shareholders “as at the date of this Red Herring Prospectus” could apply in the quota. Upstox reported the Coal India record date for the CMPDI issue as 12 March 2026, the date of that company’s RHP.

What this means in practice:

  • The RHP is often filed only a week or two before the issue opens. By the time you see the price band, the cut-off may have passed.
  • Your shares must show in your demat account on that date. A trade placed on the day itself may not settle in time.
  • One share is usually enough, but check the definition. Bajaj Housing Finance limited eligibility to individuals and HUFs, and excluded depository receipt holders.
  • Your PAN must match the PAN in the parent’s register of shareholders. The Bajaj Housing Finance RHP said so in its list of dos.
  • Selling the parent’s shares after the eligibility date does not cancel your eligibility under that wording, but read the RHP for any extra condition.

Applying in both retail and shareholder categories

Normally one PAN gets one bid per category, and anyone bidding in a reserved category cannot also bid in the net offer. Regulation 33 makes an exception for employees and retail individual shareholders. A retail individual shareholder is one who bids for not more than ₹2 lakh.

So an eligible shareholder can place two bids:

  1. Open your broker’s IPO page or your bank’s ASBA menu and choose the issue.
  2. Select the shareholder category and bid for up to ₹2 lakh. Tick the cut-off price if you want.
  3. Approve the UPI mandate, or confirm the ASBA block in net banking.
  4. Place a second, separate application in the retail (individual investor) category, again up to ₹2 lakh.
  5. Approve the second mandate before 5 pm on the closing day.
  6. Note both application numbers for the allotment check.

Each application needs its own block of funds. UPI can be used for individual bids up to ₹5 lakh, so each bid fits within that limit. Step-by-step screens for net banking and broker apps are in our guide to applying for an IPO.

Bid limits in each category

Category Bid value Cut-off price Can also bid in net offer?
Shareholder quota, small bid Up to ₹2 lakh Yes Yes
Shareholder quota, large bid Above ₹2 lakh, up to the size of the quota No No
Retail individual investor Up to ₹2 lakh Yes Not applicable

Example using CMPDI’s figures: the price band was ₹163–₹172 and a lot was 80 shares, or ₹13,760 at the top of the band. Fourteen lots cost ₹1,92,640, just under ₹2 lakh. An eligible Coal India shareholder could bid 14 lots in the quota and another 14 lots as a retail investor.

Shareholders who bid above ₹2 lakh are treated like non-institutional bidders on timing. The Bajaj Housing Finance RHP said such bids had to be uploaded by 4 pm on the closing day and could not be withdrawn or lowered.

Allotment inside the quota is proportionate, as SEBI’s ICDR FAQ states for categories other than retail, non-institutional and anchor investors. The retail rule of at least one lot per allottee, with a draw of lots when oversubscribed, does not apply there. A heavily subscribed quota can still leave you with nothing.

Where to find the quota in the RHP

  1. Download the RHP from the SEBI, NSE or BSE website, or from the lead manager’s site.
  2. Read the cover page. It states the size of any “Shareholders Reservation Portion”.
  3. Go to “Definitions and Abbreviations” and read “Eligible Shareholders” for the parent company and the eligibility date.
  4. Read “Offer Structure” for the share of the issue and bid limits.
  5. Read “Offer Procedure” for the bidding rules, including multiple bids and cut-off.

The draft red herring prospectus (DRHP) shows whether a quota is proposed, but the final definition is in the RHP. Upcoming issues are listed on our IPO calendar.

Frequently asked questions

How many shares of the parent do I need for the shareholder quota?

SEBI sets no minimum. Recent RHPs treated any public shareholder as eligible, so one share has been enough, but check the definition in each RHP.

What is the record date for the shareholder quota?

It is the date set in the RHP, often the RHP date itself. Shares must be in your demat account on that date.

Can I apply in both the shareholder and retail categories?

Yes, if your shareholder bid is up to ₹2 lakh. A shareholder bid above ₹2 lakh bars you from bidding in the net offer.

Does the shareholder quota guarantee allotment?

No. Allotment in the quota is proportionate, and an oversubscribed quota can leave you with no shares.

Can I use a different demat account from the one holding the parent’s shares?

Eligibility is checked against the parent’s shareholder records and your PAN. Use an account under the same PAN as the first holder, and read the RHP for any further condition.

Do employees of the parent get a separate quota?

Only if the RHP creates an employee reservation that covers them. An employee who is also a shareholder can bid in both, subject to the ₹2 lakh limit in the shareholder quota.

Sources

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