MUMBAI: The Securities and Exchanges Board of India (SEBI) announced a slew of measures on Wednesday to drive more investment into government securities, encourage promoters to have more skin in the game and eased regulations for market participants.
In a major fillip to start-up promoters, the board has allowed them to hold employee stock options (Esops) at the time of going for an initial public offer, with conditions. “The proposal approved by the Board shall facilitate founders who received such benefits (Esops) at least one year prior to the filing of DRHP with the Board, to continue holding, and/or exercising such benefits even after being specified as the promoters and the company becoming a listed entity,” SEBI’s 42-page statement said
Addressing the media after the board meeting, SEBI chairman Tuhin Kanta Pandey said that this decision is expected to convince startup founders to come to the public markets. However, he clarified that an industry proposal of allowing fresh Esop benefits to be availed by founders after the listing was not approved by the board.
To encourage investments in G-Secs to attract long-term capital, the registration and compliance burden for foreign portfolio investors (FPIs) investing solely had been eased. The SEBI statement noted that several global index providers have announced inclusion of G-Secs in their respective bond indices. These inclide J P Morgan Global EM Bond Index (from June 2024), Bloomberg EM Local Currency Government Index (from January, 2025) and FTSE Russell Emerging Markets Government Bond Index (starting September, 2025). In fact, FPI investment in FAR eligible securities has seen a significant increase and has crossed ₹3 lakh crore mark in March 2025.
Legally, this would require modifications to the SEBI (Foreign Portfolio Investors) Regulations, 2019, and could involve simplified know your customer (KYC) and ongoing reporting requirements.
Other important measures include, permitting AIFs to offer co-investment opportunities through separate vehicles and allowing managers to provide advisory services would necessitate amendments to the SEBI Regulations, 2012, particularly around the definition and governance of co-investment vehicles. The move is likely to enhance flexibility for sophisticated investors and align Indian practice with global trends.
“This will attract more investments in this asset class and provide opportunities to the sophisticated investor to participate with more conviction. AIFs can create a Co-investment vehicle to execute this within Category 1 and 2 AIFs. Further it will provide fund managers with additional capital to look for more investment opportunities and deliver better on their performance,” said Kush Gupta, Director at SKG Investment & Advisory.
PSUs, other than banks, non-banking financial companies (NBFCs, and insurance companies, in which aggregate shareholding of Government of India equals or exceeds 90% of total issued shares of the PSU, would be eligible for delisting under the relaxed route.
Guidelines for qualified placements (QIPs) have been simplified, amendment to regulatory framework of social stock exchange, amendment to merchant banking regulations to rationalise and ease business, ease for startup companies that are reverse flipping.
There are also regulatory ease for debenture trustees, easier compliance for real estate trusts (REITs) and infrastructure investment trusts (InvITs), ease for custodians to provide other financial services under same legal entity, restructured disclosure document for portfolio managers and use of liquid mutual funds and overnight funds for compliance with deposit requirements mandated for investment advisors and research analysts.
Interestingly, the board has also allowed certain brokers who traded on the National Spot Exchange to go for a settlement.
Source: The Financial Express
