SEBI Board Meeting: Chairperson Pandey Clarifies PSU Delisting Norms, Founders Owning ESOPs At IPOs And More

We come to an end of today's SEBI meet coverage. See you at the next meeting!

Here are some of the key takeaways from the meeting:

• Approved easier norms for the voluntary delisting on government firms.

• Confirmed co-investment opportunities for the alternate investment fund industry.

• Approved easier compliance norms for research analysts and investment advisors.

• Okayed norms for ease of doing business for portfolio managers.

• Allowed the founders of startup companies to retain employee stock ownership plans that they were granted at least a year before a firm's initial public offering.

The Securities and Exchange Board of India approved a proposal to allow the founders of startup companies to retain employee stock ownership plans that they were granted at least a year before a firm's initial public offering. Catch all updates on the same here.

Read more on SEBI's approval for the voluntary delisting of government PSUs here.

Clearing corps should be independently funded. The ownership can still be with exchanges, said Pandey.

Source: Presser

The SEBI post-meet press conference has ended.

There is no proposal for clearing corporations equity shareholding, said Chairperson Pandey on the topic of clearing proposals of demerger from parent exchanges.

The issue of demerger was one of the the reasons for NSE IPO delay as per a SEBI letter.

If merchant bankers are doing an activity that is regulated by any other financial regulator, that authority will deal with it, clarified Pandey. For unregulated activities, investors will be informed that there will be no grievance mechanism, he added.

Source: Presser

Giving concise disclosures is allowed, said Chairperson Pandey. Public consultations on all changes were done, and they were approved after releasing a consultation paper, he added.

Source: Presser

Promoters, selling shareholders, key managerial personnel, directors and even employees will have to dematerialise their holdings before IPO, said Pandey.

Source: Presser

The board has not approved the consultation that startup founders should be able to hold onto their ESOPs after listing, said Pandey.

Source: Presser

Merchant bankers will be allowed to undertake several activities not regulated by SEBI.

Norms for ease of doing business for portfolio managers have been confirmed by the board.

The board approved easier compliance norms for research analysts and investment advisors.

SEBI is proposing a new model where AIFs can launch a separate CIV for each co-investment opportunity. These CIVs will be linked to the main AIF but will function as separate schemes with their own registration.

SEBI’s working group on 'Ease of Doing Business' found several issues with the current PMS-based co-investment model. These include increased costs, complex paperwork, delays in deal closures, and a lack of flexibility. Foreign funds, not subject to these constraints, have an advantage over domestic fund managers when competing for big-ticket deals in India.

"As an active investor in the SME segment, I believe that tighter listing norms are not only necessary but long overdue. The next phase of SME fundraising must be driven by credibility as much as by capital," said Highbrow Securities' Singh.

"And while PSU delisting guidelines or clearing corporation caps may seem technical, together they underscore SEBI’s broader goal: building a market resilient not just to volatility, but to complacency," he added.

The board is also expected to discuss treating Real Estate Investment Trusts and Infrastructure Investment Trusts as equity instruments for the purpose of index inclusion.

SEBI has proposed a separate delisting process just for PSUs. Only PSUs where the government and other public-sector promoters already hold 90% or more of the total shares would qualify. 

These companies would not need to meet the minimum public shareholding rule before delisting. They would also be allowed to exit the market at a fixed price — this price would still be at least 15% higher than the calculated floor price. However, as a relief, it wouldn’t need to follow the full reverse book-building process.

Several PSUs face challenges such as low public shareholding, outdated business models, weak future prospects, and inflated market prices caused by low free float, making delisting financially burdensome for the government. To address these issues and ease the delisting process for such PSUs, SEBI has proposed establishing a separate framework specifically for voluntary delisting.

"SEBI's upcoming board meeting is more than a routine regulatory check-in, it could mark a pivotal shift in how Indian capital markets balance access, oversight, and accountability," said Tarun Singh, MD and Founder, Highbrow Securities.

"Tools like verified UPI IDs and the new ‘SCORES’ app signal a proactive approach to investor protection," he added.

Suggestions were made for AIF investors to have co-investment opportunities in unlisted companies through a co-investment vehicle, as per the May 6 proposal.

Read the whole story here.

The markets regulator suggested a special framework to make it easier for the government to delist PSUs from the stock market when the government already owns at least 90% of the company, in a proposal on May 6.

The Securities and Exchange Board of India is set to convene its board meeting on Wednesday, with a primary emphasis on enhancing the ease of doing business for market participants.

Stay tuned for updates with NDTV Profit here.