Securities and Exchange Board of India (Sebi) revised rules governing investment bankers, expanded the scope of price-sensitive information, and approved stricter guidelines for small and medium-sized business (SMEs) listing.

In the midst of the investor frenzy surrounding SME fundraising, the market regulator has made the decision to tighten eligibility requirements in order to guarantee that only businesses with a solid track record raise capital from the general public and be listed.

"Only if an issuer has an operating profit (earnings before interest, depreciation, and tax) of Rs 1 crore from operations for any two of the three prior fiscal years at the time of filing its draft red herring prospectus (DRHP) may the issuer make an initial public offering (IPO)," stated Sebi.

Additionally, Sebi has restricted the size of the offer for sale (OFS) by limiting selling shareholders to 20% of the issue size, and preventing selling shareholders from selling more than 50% of their interests. Additionally, SMEs will be covered by Sebi's linked party requirements and promoter lock-in laws.

Sebi has made the decision to establish threshold limits for classifying occurrences as UPSI and to expand the definition of unpublished price-sensitive information under the Prohibition of Insider Trading Regulations (PIT).

According to Sebi, "flexibility has been provided to make entries in the structured digital database on a deferred basis, within two days, and to not have mandatory trading window closure for events emanating from outside the company."

Additionally, the regulator has mandated that merchant bankers' underwriting limits be 20 times their liquid net worth. The ease of standards for debenture trustee regulations, REITs and InvITs, and Business Responsibility and Sustainability Reports (ESG-related disclosures) are further significant decisions.

Additionally, Sebi has relaxed the rules pertaining to mutual fund workers' skin-in-the-game.