Concise Pointer Summary of SEBI’s Evolving Regulatory Landscape
October 26, 2025
BMP & Co LLP
Corporate Affairs Bulletin
SEBI’s 210th Board Meeting – Key Reforms Unpacked
The Securities and Exchange Board of India (SEBI) held its 210th Board Meeting on June 18, 2025, in Mumbai.
In line with its ongoing efforts to foster ease of doing business, market transparency, and capital market modernization, SEBI approved a series of impactful regulatory reforms.
The reforms span critical areas including public issue regulations, debenture trustee oversight, Qualified Institutional Placement (QIP) processes, social finance frameworks, listing obligations, and foreign investor compliance, among others. The updates reflect SEBI’s commitment to simplifying regulatory compliance while strengthening investor protection and operational efficiency.
This newsletter provides a detailed breakdown of key decisions—with select topics explored in depth—and a concise pointer summary of other important measures, offering stakeholders a quick yet thorough understanding of SEBI’s evolving regulatory landscape.
Detailed breakdown of key decisions:
1. Public Issue & Listing Enhancements [SEBI (ICDR) Regulations, 2018 & SEBI (SBEB) Regulations, 2021)]:
Offer for Sale (OFS) Exemption: The one-year minimum holding period for equity shares to be eligible for OFS in public issues is now exempt for equity shares arising from the conversion of fully paid-up Compulsorily Convertible Securities (CCS) received under approved schemes. This change aims to facilitate participation in OFS and assist companies undertaking reverse flipping (shifting incorporation from a foreign jurisdiction to India).
Expanded Minimum Promoter Contribution (MPC): Beyond promoters, certain relevant persons can now contribute equity shares from converted fully paid-up CCS towards the MPC requirement. These relevant persons include alternative investment funds, foreign venture capital investors, scheduled commercial banks, public financial institutions, IRDAI-registered insurance companies, non-individual public shareholders holding at least five percent of the post-issue capital, or any entity within the promoter group (excluding the promoter(s)).
Founder Share-Based Benefits (ESOPs): Founders classified as promoters, who previously had to liquidate share-based benefits (including ESOPs) before an IPO, are now permitted to continue holding and exercising such benefits even after the company becomes listed, provided they received these benefits at least one year prior to the filing of the Draft Red Herring Prospectus (DRHP).
2. Mandatory Dematerialization of Securities Prior to DRHP Filing:
Objective: To further promote and achieve dematerialization of securities at the time of listing.
Expanded Scope: In addition to promoters, SEBI has mandated the dematerialization of securities held by a broader range of shareholders before the issuer files the DRHP.
This includes Promoter Group, Selling Shareholders, Key Managerial Personnel (KMPs), Senior Management, Qualified Institutional Buyers (QIBs), Directors, Employees, Shareholders with special rights, and all entities regulated by Financial Sector Regulators.
Benefits: This decision is expected to bring more classes of shareholders under dematerialization, reducing the volume of physical shares, and offering benefits such as reduced frauds and forgery, elimination of loss and damage, faster and more efficient transfers, improved transparency and regulatory oversight, and mitigation of legal disputes.
3. Amendments to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”):
Mandatory Dematerialization for Corporate Actions: To further encourage dematerialized holdings and prevent new physical share creation, listed entities are now mandated to issue securities only in dematerialized form for corporate actions such as consolidation/split of face value of securities and schemes of arrangement.
This aligns with SEBI's ongoing efforts to promote dematerialization, which offers benefits like reduced frauds, faster transfers, and improved transparency.
4. Simplification and Streamlining of Placement Document for Qualified Institutions Placement (QIP):
Objective: To simplify and streamline the placement document for QIPs undertaken by listed entities.
Rationale: This initiative builds upon previous simplification efforts for Rights Issues and acknowledges the public availability of information for listed entities, aiming to reduce or eliminate duplication of information in the placement document. Disclosures can now be made in a summarized and concise form.
Key Simplifications:
Risk factors will be specified primarily in relation to the issue, its objects, and material risks, doing away with generic risk factors.
The document will require a summary of the financial position instead of complete financial statements.
A concise summary of the issuer's business and industry will be sufficient.
5. Measures for Regulation of Debenture Trustees (DTs) and Ease of Doing Business:
Relaxation on Hiving Off Activities: SEBI has reversed its earlier requirement for Debenture Trustees (DTs) to hive off their non-regulated activities into a separate legal entity. DTs are now permitted to carry out activities not regulated by SEBI within the same entity, subject to certain conditions.
Permitted Non-SEBI Regulated Activities:
DTs can undertake activities within the purview of other Financial Sector Regulators (FSRs), provided they comply with the respective FSR's framework.
They can also perform activities not regulated by SEBI or other FSRs, if these are fee-based, non-fund based, and pertain to the financial services sector.
Further Approved Proposals for DTs:
Insertion of specific provisions defining the rights of DTs and corresponding obligations of issuers in the DT Regulations and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, to aid DTs in fulfilling their fiduciary duties.
Enabling provisions in DT Regulations and SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (NCS Regulations) to provide standardized formats for Model Debenture Trust Deeds (DTDs), addressing the current lack of uniformity.
Modifications in the manner of utilization of the Recovery Expense Fund (REF), clarifying the list of expenses for which REF can be utilized, easing reimbursement difficulties for DTs.
6. Deletion of Proof of Delivery Requirement for Share Transfers:
Redundant Requirement Removed: The requirement for listed entities to maintain proof of delivery for speed post intimations regarding minor or major signature differences in security transfers (under Para B(1) and B(2) of Schedule VII of Listing Regulations) has been deleted.
Reason: This requirement was deemed redundant because listed entities already maintain records of dispatch, and speed post/courier services retain proof of delivery for a significant period.
Key Action points at a glance:
IPO-bound companies: Dematerialize key shareholders' holdings; align ESOPs and CCS for MPC/OFS eligibility.
Listed entities: Use demat form only for corporate actions; no need to retain speed post delivery proof.
QIP issuers: Use simplified documents with summary risk, financials, and business info.
Debenture Trustees: No need to hive off non-SEBI activities; adopt model trust deeds and REF rules once issued.
Concise Pointer Summary for Other Key Takeaways:
Voluntary Delisting of Certain PSUs: Special measures introduced for Public Sector Undertakings (PSUs) (excluding banks/NBFCs/insurance) where government/PSU aggregate shareholding is 90% or more, allowing fixed price delisting with relaxations on public shareholder approval (two-thirds threshold waived) and floor price computation (at least 15% premium over the higher of recent trading prices or independent valuation). Provisions for transferring unclaimed public shareholder dues to an appropriate account of designated stock exchange for 7 years, then to IEPF/IPEF.
Amendments to Social Stock Exchange (SSE) Framework: The framework is amended to ease access for social enterprises by broadening the NPO definition (including trusts, charitable societies, Section 25 companies); introducing "Social Impact Assessment Organization (SIAO)" for assessment; requiring social enterprises to raise funds within two years of SSE registration; expanding eligible activities for fundraising (aligned with Companies Act Schedule VII); easing NPO eligibility criteria; and permitting NPOs to self-report annual impact even without SSE funding.
Rationalisation and Ease of Doing Business for Merchant Bankers (MBs): Reverses the prior mandate for MBs to hive off non-regulated activities, allowing them to undertake other financial services (regulated by other FSRs or fee-based/non-fund based in financial sector) within the same entity. Introduces categorization based on net worth (Category 1: Rs. 50 crore, Category 2: Rs. 10 crore) and specific minimum revenue requirements.
Measures for REITs and InvITs: Refines the "public" definition to include related parties who are Qualified Institutional Buyers (QIBs); allows a HoldCo to adjust its own negative cash flows against cash received from SPVs before distributing to the REIT/InvIT; aligns reporting timelines (quarterly, valuation) with financial results submissions; and reduces the minimum allotment lot for privately placed InvITs in the primary market to Rs. 25 lakhs, aligning with secondary market trading.
Streamlined Certification for Associated Persons: Simplifies and expedites the process for specifying certification requirements and associated timelines for "Associated Persons" by allowing these to be issued via a Circular instead of an Official Gazette Notification.
Custodians Can Offer Other Financial Services under Same Legal Entity: Reverses the earlier requirement for custodians to set up a separate legal entity for financial services not regulated by SEBI or other financial sector regulators. They can now share manpower and infrastructure for such services within the same entity, provided adequate conflict of interest mechanisms are in place.
Category I & II AIFs to Offer Co-investment Opportunities: Permits Category I & II Alternative Investment Funds (AIFs) to offer Co-investment Schemes (CIV schemes) within the AIF structure, providing an alternative to the existing Portfolio Manager (PMS) route for co-investment.
Rationalized Angel Funds Framework: Continues regulation under AIF framework but with rationalization. Mandates Angel Investors to be Accredited Investors (AIs), treating AIs as QIBs for Angel Fund investments, thereby broadening the eligible investor pool. Offers operational ease including relaxed investment floor/cap (INR 10 lakh–25 crore), removal of concentration limits, allowing more than 200 AI investors, and enabling follow-on investments in companies no longer start-ups.
Relaxations for FPIs in Government Securities (G-Secs): Eases regulations for Foreign Portfolio Investors (FPIs) exclusively investing in G-Secs ("GS-FPIs"). This includes less frequent KYC reviews (harmonized with RBI), no requirement to furnish investor group details, permitting Non-resident Indians, Overseas Citizens of India, and Resident Indians as constituents without general FPI restrictions on control, and extending the timeline for intimating material changes to 30 days (from 7 days).
Simplified Portfolio Manager Disclosure Documents: The mandatory format for the 'Model Disclosure Document' for Portfolio Managers will be deleted from the Regulations and issued via Circular. The document will be restructured into Dynamic (frequently changing) and Static (infrequently changing) parts for improved operational convenience and investor clarity.
Settlement Scheme for NSEL Platform Stock Brokers: A one-time settlement scheme has been introduced for Stock Brokers who traded on the National Spot Exchange Ltd (NSEL) platform, allowing them to settle enforcement actions by SEBI with monetary and non-monetary terms.
Settlement Scheme for Migrated Venture Capital Funds (VCFs): A one-time settlement scheme for Venture Capital Funds (VCFs) who delayed winding up their schemes but have since migrated to AIF Regulations. The settlement amount varies based on delay duration and the cost of unliquidated investments, with the Investment Manager/Sponsor bearing the costs. The application deadline is January 19, 2025.
Expanded Deposit Options for Investment Advisers (IAs) and Research Analysts (RAs): IAs and RAs can now use liquid mutual funds and overnight funds as an additional option to bank fixed deposits for meeting their deposit requirements. This addresses operational difficulties with fixed deposits and recognizes these funds as low-risk, liquid alternatives.
DISCLAIMER
The content provided in this article is based on research and is for informational and academic purpose only and should not be constituted as legal advice or advertisement/solicitation.
While every effort has been made to ensure accuracy, discrepancies may still occur. Readers are therefore advised to cross-verify the information with the original source.
Source: SEBI | SEBI Board Meeting