Mumbai— In a major push to modernize India’s financial markets, the Securities and Exchange Board of India (SEBI) on Wednesday approved a series of reforms aimed at boosting efficiency, investor participation, and startup ecosystem growth.
The decisions were made during a SEBI board meeting chaired by Tuhin Kanta Pandey.
Among the most notable changes is the easing of rules around employee stock ownership plans (ESOPs) for startup founders. Previously, founders were classified as ‘promoters’ after their companies went public, making them ineligible for ESOPs. The updated regulation now allows them to retain ESOPs even post-IPO, acknowledging the sacrifices many founders make by working for minimal salaries in exchange for long-term equity.
To prevent abuse, SEBI has mandated a one-year cooling-off period between the issuance of ESOPs and the company’s IPO filing.
In another landmark decision, SEBI approved a streamlined framework for the voluntary delisting of public sector undertakings (PSUs). The change simplifies what was previously a cumbersome process, enabling easier exits from the stock market if shareholder approval is secured. This reform is expected to aid the government’s strategic disinvestment plans, as it holds significant stakes in numerous PSUs.
Alternative investment funds (AIFs) also stand to benefit from the regulatory overhaul. AIFs will now be permitted to offer co-investment opportunities through separate vehicles, allowing large investors to participate directly in the same private deals as the fund. Additionally, AIF managers can now provide advisory services across investor categories, even when their funds hold positions in listed companies, increasing their flexibility to offer tailored financial guidance.
In a bid to attract more long-term foreign investment, SEBI has also relaxed rules for foreign investors interested exclusively in Indian government bonds. Given the relatively low-risk nature of sovereign bonds, registration and compliance requirements will be simplified to encourage stable capital inflows from global investors.
Lastly, SEBI addressed the ongoing National Spot Exchange Limited (NSEL) case, where over 300 show-cause notices have been issued. The regulator is considering a possible settlement path under its consent regulations framework, taking into account feedback from the Securities Appellate Tribunal (SAT).
These reforms mark a significant step in SEBI’s ongoing efforts to foster a more inclusive, transparent, and globally competitive market environment. (Source: IANS)
