SEBI Board Meeting Outcome: Check Out the Key Updates You Should Know

In a significant push to enhance capital market efficiency, ease regulatory burdens, and boost investor participation across asset classes, the Securities and Exchange Board of India (SEBI), at its board meeting on June 18, approved a wide-ranging set of reforms. The changes touch upon everything from PSU delisting to IPO-related ESOP norms, marking a blend of long-anticipated policy updates and progressive business-friendly measures.

10 Major Highlights from SEBI Board Meet

1. Simplified Delisting Norms for PSUs with 90 %+ Government Holding

SEBI has approved a simplified voluntary delisting framework for Public Sector Undertakings (PSUs) where the government holds 90% or more. The revised mechanism allows delisting at a fixed price, offering a 15% premium over the floor price. Crucially, it removes the requirement for two-thirds public shareholder approval, aligning closely with the government’s broader disinvestment strategy.

2. ESOP Flexibility for Founders of IPO-Bound Startups

In a major relief for startup founders, SEBI now permits them to retain Employee Stock Ownership Plans (ESOPs) post-IPO, acknowledging their reliance on equity in lieu of salaries. To prevent abuse, a one-year cooling-off period between ESOP issuance and IPO filing will be mandatory, aligning founder incentives with long-term shareholder value.

3. Merchant Bankers Allowed to Conduct Non-SEBI-Regulated Activities

Reversing an earlier directive, SEBI will now permit merchant bankers to carry out non-SEBI-regulated activities within the same legal entity. This eliminates the need to carve out separate entities for such services, offering relief and operational ease to capital market intermediaries.

4. Relaxed Norms for FPIs Investing in Government Bonds

To attract steady global capital inflows, SEBI has eased compliance and registration requirements for Foreign Portfolio Investors (FPIs) investing solely in Indian Government Bonds under the Voluntary Retention Route (VRR) and Fully Accessible Route (FAR).

5. Working Group Formed on Unbundling Trading and Clearing Charges

SEBI has constituted a working group to explore the separation of trading and clearing charges. The move follows public debate triggered by a consultation paper, with the aim of ensuring that clearing corporations maintain independent, self-sustaining revenue models.

6. One-Time Settlement Scheme for NSEL and VCF Violations

In an effort to resolve long-pending enforcement actions, SEBI has approved a one-time settlement scheme for brokers involved in the National Spot Exchange Limited (NSEL) case, covering over 300 show-cause notices. A similar window is being introduced for historical breaches of Venture Capital Fund (VCF) regulations.

7. Streamlined Documentation for Qualified Institutional Placements (QIPs)

Amendments to SEBI's ICDR Regulations, 2018, will now simplify the documentation process for QIPs. The changes reduce duplication and emphasize key disclosures, thereby making institutional fundraising faster and more efficient.

8. Mandatory Dematerialisation Before DRHP Filing

SEBI has made it compulsory for promoters and key management personnel to dematerialise their shares before submitting a Draft Red Herring Prospectus (DRHP). This ensures complete dematerialisation at the time of listing, enhancing transparency and investor trust.

9. Liquid and Overnight Mutual Funds Allowed for Compliance Deposits

To ease compliance for Research Analysts (RAs) and Investment Advisers (IAs), SEBI now permits them to meet deposit requirements using liquid mutual funds and overnight funds, offering flexibility without compromising regulatory intent.

10. Co-Investment Permitted Within AIF Structures

SEBI approved a new framework enabling co-investment within Alternative Investment Funds (AIFs) through a dedicated Co-Investment Vehicle (CIV). This offers investors more flexibility while ensuring synchronised exits and protection for the primary fund.

Also Read: SEBI’s SIF Push Spurs Mutual Fund Entry by AIFs, Wealth Managers

Additional Reforms and Clarifications

• Mutual Fund Limits in REITs/InvITs Raised: Investment cap in equity schemes increased from 10% to 20% of NAV; REITs/InvITs now treated as equity for index eligibility.
• Social Stock Exchange: Enhanced fundraising and disclosure flexibility for social enterprises.
• ESG Data Access: ESG rating agencies will now be able to access non-public ESG data from listed companies under a regulated framework.

Conclusion

SEBI's latest measures collectively mark a significant stride toward a more agile, transparent, and investor-friendly capital market ecosystem, reflecting its commitment to fostering long-term market development and ease of doing business.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.