Mainboard Eligibility explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two doors to the mainboard: satisfy three financial tests in each of three years, or let institutional investors take three-quarters of the issue.
Mainboard eligibility under the profitability route
Under the profitability route, the issuer must satisfy specified financial eligibility criteria:
| Criterion | Threshold |
|---|---|
| Net tangible assets | At least Rs. 3 crore in each of the preceding three years, with not exceeding 50% of those assets comprising monetary assets — a condition that does not apply where the issue is entirely an offer for sale |
| Operating profit | An average of at least Rs. 15 crore over the three preceding years, with operating profit recorded in each of those three years individually |
| Net worth | At least Rs. 1 crore in each of those three years |
The monetary asset cap. Net tangible assets must be at least Rs. 3 crore, and not exceeding 50% of those assets may be monetary assets. A company sitting on cash therefore cannot satisfy the test on the strength of that cash — it needs real operating assets.
This connects directly to the earlier point about carving out surplus cash. Idle funds not only fail to attract a valuation and depress return ratios; they can also count against mainboard eligibility.
The exception is instructive: the condition does not apply where the issue is entirely an offer for sale. In a pure OFS the company raises nothing, so the concern about a cash-rich company accessing further public funds does not arise.
Operating profit in each year individually. The requirement is an average of Rs. 15 crore over three years and operating profit recorded in each of those three years individually.
A company earning Rs. 45 crore in one year and nothing in the other two has the average and fails the test. One loss-making year in the three-year window defeats eligibility entirely — which is another reason the readiness runway must be long enough that the three restated years are all clean.
Mainboard eligibility through the QIB route
Where these criteria are not met, an issuer may instead access the market through the Qualified Institutional Buyer route, under which at least 75% of the issue is required to be allotted to Qualified Institutional Buyers.
The logic of the alternative is investor protection through sophistication rather than through financial history. A company without three years of profitability may still be a sound investment — but the judgement of that is left largely to institutions, who have the resources to assess it, rather than to retail investors relying on a track record that does not exist.
The seventy-five per cent threshold also has a practical consequence: an issuer on this route must be able to attract institutional demand for three-quarters of the issue, or the offering does not proceed.
The overlooked requirement
The session noted, as a basic but often overlooked requirement, that all securities issued must be held in dematerialized form.
Straightforward in principle, and a genuine problem for older family companies whose historical shareholdings may still be in physical form — a condition that has to be cured, shareholder by shareholder, before filing.
Choosing the route
- Test net tangible assets in each of the three years, applying the 50% monetary asset cap.
- Test operating profit both on average and year by year.
- Test net worth in each year.
- If any test fails, assess whether 75% institutional allotment is achievable.
- Confirm all securities are in dematerialized form.
Common mistakes
- Satisfying the operating profit average while one year is loss-making.
- Counting surplus cash towards net tangible assets beyond the 50 per cent cap.
- Assuming the QIB route removes the need for institutional demand.
- Discovering physical shareholdings during the filing process.