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I know that inside any SharePoint online site we can allow contributors to share individual files/folder, by checking this check box:-

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But in our case we do not want all the contributors to be able to share individual files (so we kept the above checkbox UN-checked), but we want certain contributor users to have the ability to share individual files/folder? so can we create a custom permission level for this purpose? and what is the minimum permissions needed, without granting users additional permission to edit the lists and sites settings?

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First, this option does not restrict users to share individual files and folders in this site. Checking this option only allow members to share with others without requiring owner approval.

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Second, the Site sharing settings via Settings > Site permissions > Change how members can share act the same as the options under Access Requests Settings. In fact, these settings are all SharePoint can provide for the time being. There is no permission level that we can use to restrict specific users from sharing individual files and folders.

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  • if i uncheck the check box shown inside my question , then contributor users can not share individual files,. – John John Jun 9 '20 at 9:32
  • @SharePointTestDev Yes, they cannot share individual files directly, but they can send request to Site Owners and let them decide if the file can be shared or not (see the first screenshot in the answer). As far as I know, that is the closest thing you can get to “certain contributor users to have the ability to share individual files/folder”, for now. – Chelsea_MSFT Jun 9 '20 at 9:46

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