How to apply under the employee category in an IPO on Zerodha

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Many Initial Public Offerings set aside an employee reservation portion, a tranche of shares offered exclusively to current and, in some cases, former employees and directors of the issuer company (and its holding or subsidiary companies, where stated in the Red Herring Prospectus). The employee category offers two advantages: a separate allotment pool independent of the general retail subscription, and an optional employee discount of up to 10% of the issue price. This guide covers the eligibility rules, how to apply under the employee investor type in Zerodha Kite, and how the registrar validates your employment.

For the generic Kite web procedure see the Kite web IPO guide. For the shareholder reservation category see the shareholder category guide. For the underlying mechanism see UPI ASBA.

What the employee reservation covers

Under Regulation 33 of SEBI ICDR Regulations 2018, the issuer may reserve shares for eligible employees and permanent directors of the issuer company, and in some issues, eligible employees of the holding company or subsidiary companies. The RHP defines:

  • Eligible employee, typically a permanent employee who has been on the payroll for a minimum period (commonly three to six months) preceding the RHP filing date.
  • Employee discount, the issuer may offer eligible employees a price discount of up to 10% of the final issue price. This discount is applied at the time of allotment. The UPI mandate, however, is blocked for the full bid amount before the discount.
  • Maximum bid value, SEBI ICDR permits employees to bid up to Rs 5,00,000 in the employee category, which is higher than the Rs 2,00,000 retail ceiling. As revised by NPCI in September 2025, UPI ASBA for capital market transactions is permitted up to Rs 5,00,000.
  • Separate allotment pool, the employee portion is allotted independently of the retail (RII) and non-institutional (NII) pools.

Step-by-step procedure

Confirm your eligibility from the RHP

Download and read the RHP carefully before applying. Look for the Employee Reservation Portion chapter or the Definitions section for the definition of Eligible Employee. Note whether employees of holding companies or subsidiaries are included, the employment status cut-off date, any minimum tenure requirement, whether an employee discount is being offered, and the maximum bid value under the employee reservation portion.

If you are unsure whether you qualify, consult your company’s HR or investor-relations team. The issuer typically distributes an internal communication to eligible employees when the RHP is filed.

Sign in to Zerodha Kite and navigate to the issue

Go to kite.zerodha.com and sign in with your client ID, password, and TOTP 2FA. Click Bids in the top navigation, then IPO. Locate the issue.

Click Apply and select Employee as investor type

Click the Apply button. The bid entry modal opens with Individual (retail) pre-selected. Change the investor type to Employee using the dropdown.

Enter lot quantity, price, and UPI ID

Enter the number of lots within the employee reservation limit stated in the RHP. Select Cut-off (recommended) or a price within the price band. If an employee discount is offered, the mandate is blocked for the full bid amount; the discount reduces the actual debit at allotment time, and the excess is released.

Enter your UPI ID in username@bank format. The UPI ID must belong to a bank account in your own name with a PAN matching your Zerodha demat.

Tick the SEBI undertaking and submit

Tick the SEBI undertaking checkbox, which for the employee category includes a declaration that you are an eligible employee or director of the issuer as at the relevant cut-off date. Click Submit. The bid status changes to Pending Mandate.

Approve the UPI mandate

Open your UPI app and approve the Block Funds for IPO mandate before 5 PM IST on the bid closing day. See:

Verify allotment on T+1

Navigate to Bids → Order history on Kite. The registrar validates your employment against the issuer’s employee PAN list during allotment processing. Allotment for the employee portion is proportionate in oversubscription. If allotted, the discount (if any) is reflected in the actual debit; the difference between the mandate block and the allotment consideration is released on your bank statement.

How the registrar validates employment

The registrar verifies employee-category bids by cross-referencing the PAN on the bid against the issuer’s employee PAN list (submitted by the issuer’s HR team at RHP filing), the employment status cut-off date, and the absence of duplicate applications under the same PAN. If your PAN is not in the issuer’s employee list or your employment status is recorded incorrectly, the bid is rejected by the registrar even if you are genuinely eligible. Confirm your PAN is correctly registered with your employer’s HR system well before the issue opens.

What can go wrong

  • PAN not in the issuer’s employee PAN list. The registrar rejects the bid silently. Contact HR to confirm.
  • Employment terminated before the cut-off date. Former employees are generally not eligible unless the RHP specifically includes them.
  • UPI mandate not approved by 5 PM IST on closing day. Bid is rejected regardless of eligibility.
  • Employee discount not reflected in expected debit. The discount is applied at the allotment stage; the mandate blocks the full bid amount.
  • Employee reservation undersubscribed. Residual shares may be absorbed into the NII or QIB pool, as specified in the RHP.

References

  1. SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, Regulation 33, https://www.sebi.gov.in/legal/regulations/aug-2018/sebi-issue-of-capital-and-disclosure-requirements-regulations-2018_39971.html.
  2. SEBI Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, T+3 listing timeline.
  3. NPCI Circular dated 8 September 2025, Enhancement of UPI Per-Transaction Limits for Capital Markets and Insurance Premium Categories.
  4. FAQs on IPO applications, Zerodha Support Portal.

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The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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