SEBI allows ESOP retention by founders, eases PSU delisting and FPI G-Sec norms

A key proposal on the independence of ownership of clearing corporations did not reach a conclusion to formulate into a circular yet.
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HEMANSHI KAMANI

The Securities and Exchange Board of India (SEBI) has approved a slew of measures aimed at ease-of-doing-business and rationalisation of regulations, including easing restrictions on employee stock options (ESOPs) for start-up founders, reduced requirements for foreign investors investing exclusively in the country’s government bonds, and allowing voluntary delisting of public sector undertakings (PSUs).

The regulatory board has also approved easing of social stock exchange framework, activities of real estate investment trusts (REITs) and Investment Infrastructure Trusts (InvITs), allowed category 1 & 2 AIFs to offer co-investment opportunities within AIFs, and simplified the placement document for qualified institutional placements (QIPs) and disclosure format for portfolio managers.

Allowing ESOPs will “facilitate founders who received such benefits 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 promoter/s and the company becoming a listed entity.” These are expected to assist public companies who intend to list after undertaking reverse flipping, which is shifting the country of incorporation from a foreign jurisdiction to India.

Clearing ownership pause

A key proposal on the independence of ownership of clearing corporations did not reach a conclusion to formulate into a circular yet. “We do not intend to do any change at the moment in the structure of clearing corporations being wholly owned subsidiaries of exchanges,” said chairman Tuhin Kanta Pandey at the post board meeting press conference.

SEBI has set up a working group to look into the unbundling of exchange charges to ensure clearing corporations can be independently funded over the next couple months.

Currently, all exchange and clearing corporations’ charges are being bundled as one at the exchange level, and these charges–such as transaction and exchange charges–are perfectly enough to keep both entities financially healthy. “An unbundling will only determine how much belongs to which entity; it should not theoretically increase the costs at all,” said whole-time member Anant Narayan.

Settlement schemes

The regulator has also announced the settlement scheme for certain NSEL stock brokers, and took note of the settlement scheme of violations of winding up provisions by migrated venture capital funds.

The board has also relaxed the requirement for merchant bankers, debenture trustees and custodians to hive off to a separate legal entity in case of non-regulated activities–a proposal which was approved in the December board meeting last year. These activities can include advisory, consultancy services and will require to be clearly disclosed to clients in case of it falling outside any regulator’s jurisdiction.

The board also approved a proposal permitting Investment Advisers (IAs) and Research Analysts (RAs) to use units of liquid mutual funds and overnight funds, marked with a lien in SEBI’s favour, to meet their mandatory deposit requirements. Under current regulations, IAs and RAs are required to maintain a deposit with a scheduled bank, lien-marked in favour of the Administration and Supervisory Body (ASB).

Published on June 18, 2025