SEBI Approves Big Changes in Market Rules — Easier IPOs, PSU Delisting and More

In a major step towards improving India’s financial markets, the Securities and Exchange Board of India (SEBI) has approved many important changes across different areas like IPOs, PSU delisting, foreign investments, and alternative funds. The aim is to make it easier to do business, attract more investors, and improve transparency in the system.

One of the key changes is for Public Sector Undertakings (PSUs). If the government owns more than 90% of a PSU, the company can now delist at a fixed price, which must be at least 15% higher than the floor price. Also, they don’t need approval from two-thirds of public shareholders anymore — this will make PSU exits faster and smoother.

In the IPO space, SEBI has made it easier for startup founders to hold on to their ESOPs (employee stock options), even after becoming promoters, if the ESOPs were granted at least a year before the IPO. Also, the rule that required a lock-in period for shares converted from other instruments during an IPO has been removed.

To prevent fraud and improve clarity, SEBI has now made it mandatory for key people — like promoters, directors, employees, and institutional investors — to demat their shares before applying for an IPO. This ensures all shares are held in digital format from the start.

SEBI also made changes for Qualified Institutional Placements (QIPs), cutting down the length of documents and making disclosures more concise. For Foreign Portfolio Investors (FPIs) who only invest in government bonds, the regulator has eased rules, with lighter KYC and fewer details required.

Alternative Investment Funds (AIFs) have received a boost too. Category I and II AIFs can now offer co-investment options. This means fund managers and select investors can invest in the same deals alongside the main fund, in a more formal way.

REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) also got relief. Now, only institutional (QIB) unitholders will be counted when checking the minimum public shareholding requirement — this will make it easier for these investment vehicles to stay compliant.

SEBI also announced a settlement window for brokers involved in the long-running NSEL case, to help wrap up pending issues. Merchant bankers can now give certain types of advisory services without needing to open a separate company — but must follow clear rules to avoid conflicts.

Finally, SEBI has allowed trusts and Section 8 companies (which work on social causes) to list on the Social Stock Exchange, helping them raise money more easily.

During the announcement, SEBI Chairperson Tuhin Kanta Pandey said, “Making money is not a sin… derivatives play a role in price discovery… but if we see excesses, we will act.” He also clarified that expiry days for F&O contracts are now fixed — NSE will expire on Tuesday, BSE on Thursday.