Startup Founders May Now Hold ESOPs Granted A Year Before Going Public: SEBI

The Securities and Exchange Board of India approved on Wednesday 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.

Under existing regulations, promoters are prohibited from holding or receiving share-based benefits like ESOPs. If promoters possess such benefits at the time of filing the draft red herring prospectus, they are required to liquidate them before the IPO.

This rule has negatively impacted founders classified as promoters during the DRHP stage.

(This is a developing story)