Key Highlights
- SEBI approves simplified voluntary delisting for PSUs with greater than or equal to 90% government ownership, removing two‑thirds public approval requirement.
- Startup founders can retain ESOPs post‑IPO after one‑year vesting; FPI rules for G‑Sec investors also eased.
The Securities and Exchange Board of India (Sebi) board approved a slew of measures relating to IPO rules, PSU delistings, foreign portfolio investments, startup ESOPs norms, and legacy cases involving the National Spot Exchange Ltd (NSEL).
PSU Delisting Norms Eased
The market regulator approved a framework to facilitate the voluntary delisting of public sector undertakings (PSUs) in which the government or a promoter group owns 90% or more equity. This is intended to make the exit process easier for such entities, as long as they meet all shareholder protection standards.
In this regard, Sebi has approved the proposal to amend the SEBI (Delisting of Equity Shares) Regulations, 2021.
ESOP Rules for Startup Founders Relaxed
Sebi's board also approved a proposal to allow startup founders to keep ESOPs granted one year before an IPO.
Under current regulations, promoters are prohibited from holding or receiving share-based benefits such as ESOPs. If they had such benefits at the time of filing the DRHP, they must liquidate them prior to the IPO.
Mandatory Demat Holding for Selected Shareholders Before IPO Filing
Sebi has mandated that certain shareholders, including promoters, directors, and key management personnel, hold their shares in dematerialized (demat) form before a company files its draft IPO papers.
QIP Documentation Rationalized
The Sebi (ICDR) Regulations, 2018 were amended to rationalize the disclosure requirements in QIP placement documents, which will benefit listed companies that raise capital through QIPs. Protecting critical investor data while reducing the burden of compliance is the aim of the decision.
Currently, the issuer of QIPs must disclose the information in the placement document in accordance with the ICDR (Issue of Capital and Disclosure Requirements) guidelines.
Compliance Relief for Foreign Portfolio Investors That Invest in Indian Bonds
The Sebi has decided to encourage investment in Indian government securities by simplifying rules and making it easier for foreign portfolio investors (FPIs) who only buy government bonds to comply.
As a result of the action, more foreign investors are expected to enter the Indian debt market.
Settlement Scheme for NSEL-Related Brokers
A one-time settlement plan will be implemented for specific brokers who traded on the now-defunct National Spot Exchange Ltd (NSEL) platform, according to an announcement made by the markets regulator. This special dispensation is a part of an attempt to use a systematic process to address long-standing problems.
AIF Co-Investment Approved
The Sebi board approved a proposal allowing alternative investment funds to offer co-investment opportunities to investors within the AIF structure.
In the AIF industry, co-investment refers to the offering of an investment opportunity to investors for additional investment in unlisted securities of an investee company in which an AIF is also investing or has previously invested.
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Angel Investors must be accredited investors
Sebi stated that angel investors must now be accredited investors (AIs) and approved their classification as qualified institutional buyers (QIBs) — but only for Angel Fund investments — in order to broaden the eligible investor base while adhering to the Companies Act.
Addressing a press conference following the board meeting, Sebi Chairman Tuhin Kanta Pandey stated, "All of these proposals were consultation papers, went to respective committees, and came to the Board. You are aware that we have a regulation in place that requires public consultations when implementing changes to regulations. The fourth proposal calls for the voluntary delisting of PSUs. The fourth proposal concerns the voluntary delisting of PSUs. We are now introducing special provisions for these PSUs. These apply to PSUs in which the promoter—typically the government—owns 90% or more equity."
Many of these companies were previously listed with a low public float and may now need to be delisted. These PSUs do not include any BFSI companies, he stated.
This was Tuhin Kanta Pandey's second board meeting as chairman, having taken office on March 1.
