Securities and Exchange Board of India (Sebi) Announcements

Sebi introduced several measures to ease compliance burdens, promote domestic listings, enhance foreign investments in government bonds, and reform regulations for various market participants.

Key Regulatory Changes

• Employee Stock Options (ESOPs):
  • Startup founders and promoters can now retain ESOPs granted a year before filing their draft red herring prospectus (DRHP) for an IPO.
  • Fresh ESOP issuances are not allowed leading up to the DRHP filing.
• Compulsorily Convertible Securities (CCS):
  • The requirement for investors to hold shares from converted CCS for a minimum of one year has been abolished.
• Promoter Contribution:
  • Shares held by foreign ventures, alternative investment funds (AIFs), and public financial institutions are now included in the minimum promoter contribution requirement for public issues.
• Clearing Corporations:
  • A working group is established to assess unbundling charges.
  • The ownership structure remains unchanged.

Additional Reforms

• Delisting of Public Sector Undertakings (PSUs):
  • Eased rules for PSUs with over 90% government shareholding, excluding banks, NBFCs, and insurance companies.
• Foreign Portfolio Investors (FPIs):
  • A new category for FPIs investing in government securities with relaxed KYC and disclosure norms.
• Alternative Investment Funds (AIFs):
  • Category-I and -II AIFs permitted to form co-investment vehicles.
  • Norm changes for angel funds initiated, easing accreditation processes.
• Merchant Bankers:
  • Allowed to retain non-core activities if disclosed to clients, reversing the December 2024 decision.
• Settlement Schemes:
  • Introduced for brokers involved in the NSEL scam and for venture capital funds.
• Dematerialisation:
  • Key shareholders, such as senior management, must dematerialize shares before DRHP filing.
• Social Stock Exchanges:
  • Loosened eligibility criteria for listing.
• Real Estate and Investment Norms:
  • Relaxed norms for real estate investment trusts and investment advisors.
• Portfolio Managers:
  • Simplified disclosure documents.

Key Relaxations

• Retention of ESOPs by startup founders before IPOs
• Delisting rules eased for PSUs with significant government holdings
• Facilitated foreign investment in government bonds
• No need for investment bankers to separate non-core activities
• Settlement schemes for NSEL brokers and venture capital funds