As expected, Sebi has tightened the regulations governing Initial Public Offerings (IPOs) for SMEs. In its board meeting on Wednesday, the capital market regulator introduced profitability requirements as well as put a cap on shares to be sold through the offer for sale (OFS) route. SMEs will now be required to have an operating profit of at least `1 crore for two out of the last three financial years before filing their DRHP.