The Securities and Exchange Board of India (SEBI) recently conducted a crucial board meeting, where several important regulatory and strategic decisions were made. With as many as 17 key agendas discussed, the meeting reflected SEBI's intent to ease compliance, encourage capital market participation, and enhance transparency across segments.
One of the major takeaways from the board meeting was the move to ease IPO-related norms for startups. SEBI has now allowed founders of startups to be recognized as promoters, even if they hold shares up to one year before filing the Draft Red Herring Prospectus (DRHP). This change is expected to significantly help startups in preparing for IPOs without losing founder control, thereby making the listing process smoother and more founder-friendly.
In another landmark decision, SEBI has provided clarity on the delisting process of Public Sector Undertakings (PSUs). For PSUs in which the government holds around 90% stake and are looking to delist due to lack of long-term strategy or limited funding, SEBI has introduced fresh guidelines. These include mandatory approval from two-thirds of the minority shareholders. Additionally, the delisting price will now be based on a fixed offer, which must be at least 15% higher than the floor price. Importantly, SEBI has clarified that this delisting relaxation does not apply to public sector banks, government NBFCs, or government insurance companies.
SEBI also introduced regulatory relaxations for Foreign Portfolio Investors (FPIs) investing in government securities. Key KYC norms and other regulatory compliance procedures have been simplified to encourage more global participation in Indian government bonds. This is seen as a positive step towards deepening India’s debt markets.
Further, SEBI announced a special settlement scheme for brokers operating on the NSE platform, aimed at resolving old pending cases. This settlement initiative is likely to reduce legal uncertainty and bring operational closure to many long-standing disputes.
For Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), SEBI has simplified several rules to ensure ease of doing business and to facilitate smoother operations in the infrastructure and real estate sectors. These simplifications are likely to attract more institutional and retail investors into these alternative investment vehicles.
Custodian institutions also received relief in this meeting. Now, they will not be required to create separate legal entities if they wish to offer additional financial services such as Portfolio Management Services (PMS) or insurance-related activities. This move is expected to promote integration and reduce compliance burdens for financial service providers.
The SEBI board also discussed the increasing speculative activity by retail investors in Futures and Options (F&O) trading. Although earlier rules had been tightened, SEBI Chairperson Madhabi Puri Buch made it clear during the press conference that a third set of stricter rules may be introduced if the volume and risk exposure from retail participation continue to grow unchecked. This signals SEBI's concern over market volatility and its potential impact on inexperienced investors.
Another significant initiative included the formation of a working group to study and potentially unbundle the charges levied by clearing corporations. The goal is to bring more transparency by clearly outlining the percentage of fees received by the exchanges and clearing corporations separately.
Lastly, SEBI issued a caution to Chief Financial Officers (CFOs) across listed companies, urging them to keep a close watch on company valuations and maintain a high degree of financial transparency.
With numerous reforms across different segments of the capital markets, SEBI's latest board meeting highlighted the regulator’s progressive stance towards creating a more efficient, inclusive, and investor-friendly market ecosystem.
Disclaimer:This blog is intended for informational purposes only and should not be construed as financial advice. Readers are advised to consult with a qualified financial advisor before making any investment decisions based on this content.
