Underneath the present rules, promoters are ineligible to carry or be granted share based mostly advantages, together with ESOPs and in the event that they held such share based mostly advantages on the time of submitting of DRHP they’re required to liquidate such advantages previous to the IPO.
This provision has been discovered to be impacting founders categorized as promoters on the time of submitting of DRHP, the Sebi board assembly doc mentioned.
Amongst different measures, with a view to reinforce market transparency, Sebi has mandated dematerialization of securities for a wider vary of stakeholders—together with promoter teams, staff, administrators, and institutional buyers—previous to submitting the DRHP. This growth of the demat mandate is predicted to scale back fraud, stop loss or harm of bodily shares, and enhance regulatory oversight.
Additionally Learn: Sebi board assembly: Regulator approves PSU delisting, IPO reforms, dematerialisation of Securities. 10 key takeaways
In a bid to streamline the public concern course of and encourage ease of doing enterprise, SEBI has additionally authorised key amendments to the Sebi (Subject of Capital and Disclosure Necessities) Laws, 2018, and SEBI (Share Based mostly Worker Advantages and Sweat Fairness) Laws, 2021. The transfer goals to simplify guidelines for corporations planning to go public, particularly these shifting their base again to India—a course of referred to as “reverse flipping.”One of many main modifications addresses a long-standing concern associated to fairness shares arising from the conversion of absolutely paid-up Compulsorily Convertible Securities (CCS). Earlier, solely fairness shares acquired below authorised schemes have been exempted from a one-year holding interval earlier than being provided on the market in an IPO. Now, this exemption has been prolonged to shares arising from CCS conversions, enabling larger investor participation in public points.The Board has additionally allowed sure “related individuals”—equivalent to various funding funds, overseas enterprise capital buyers, and public monetary establishments—to contribute fairness shares from CCS conversion in the direction of the minimal promoter contribution (MPC), a flexibility beforehand granted solely to promoters.
These measures have been finalized after public consultations in March and April 2025 and reviewed by SEBI’s Major Markets Advisory Committee, reflecting SEBI’s ongoing dedication to modernise India’s capital markets.
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