Board approved the amendment to SEBI (ICDR) Regulations, 2018 to mandate dematerialization of existing securities of select shareholders prior to filing of DRHP in order to promote dematerialization of securities in the listed domain
FinTech BizNews Service
Mumbai, June 18, 2025: The 210th meeting of the SEBI Board was held in Mumbai today. The SEBI Board, inter-alia, approved the following:
Amendments to SEBI (ICDR) Regulations, 2018 and SEBI (SBEB) Regulations, 2021 relaxing certain requirements related to public issue, with the objective of Ease of Doing Business
The existing regulations exempt the requirement of minimum holding period of one year only for equity shares acquired pursuant to an approved scheme to be eligible for Offer for Sale in public issue. This exemption is not available for equity shares arising out of conversion of fully paid-up Compulsorily Convertible Securities (‘CCS’) received under such approved scheme. This has resulted in certain investors not being able to participate in the Offer for Sale in public issue. Extending the exemption to equity shares arising from conversion of fully paid-up CCS received pursuant to approved scheme will facilitate such participation. This will assist the companies contemplating reverse flipping.
In terms of existing regulations, certain relevant persons are permitted to contribute their equity shares towards the minimum promoter contribution (‘MPC’) requirement (apart from the promoter). While promoters are allowed to contribute equity shares arising from conversion of fully paid-up CCS for MPC, such provisionis absent for such relevant persons. This amendment approved by the Board will allow contributions by such relevant persons as well.
Such relevant persons are: alternative investment funds, foreign venture capital investors, scheduled commercial banks, public financial institutions, insurance companies registered with Insurance Regulatory and Development Authority of India, any non-individual public shareholder holding at least five per cent. of the post-issue capital or any entity (individual or non-individual) forming part of promoter group other than the promoter(s).
These proposals as approved by the Board are expected to (i) assist public companies who are intending to list after undertaking reverse flipping (i.e. shifting the country of incorporation from a foreign jurisdiction to India) and (ii) relax certain requirements relating to share based benefits granted to founders prior to the company undertaking the IPO.
Board approved the amendment to SEBI (ICDR) Regulations, 2018 to mandate dematerialization of existing securities of select shareholders prior to filing of DRHP in order to promote dematerialization of securities in the listed domain.
With the objective of achieving dematerialization of securities at the time of listing, the SEBI Board, in addition to the existing provision of compulsory dematerialization of holding of promoter, has now mandated dematerialization of securities held by the following category of shareholders, before filing of the DRHP by the issuer:
1.Promoter Group
2.Selling Shareholders.
3 Key Managerial Personnel (KMPs)
4.Senior Management
5.Qualified Institutional Buyers (QIBs)
6.Directors
7.Employees
8.Shareholders with special rights
9.All entities regulated by Financial Sector Regulators
10.Any other category of shareholders as maybe specified by Board from time to time
Dematerialization of securities has several benefits, which include reduction of frauds and forgery, elimination of loss and damage of securities, faster and more efficient transfers, improved transparency and regulatory oversight, mitigation of legal disputes etc. The above decision will bring more class of shareholders under the dematerialization mode and reduce the volume of physical shares.
The aforementioned proposals were prepared pursuant to public consultation undertaken in April2025, followed by deliberation by the Primary Markets Advisory Committee and factoring in the feedback received through the public consultation.
Simplification and streamlining of Placement Document for Qualified Institutions Placement3.1The Board approved amendments to SEBI (ICDR) Regulations, 2018 for simplifying and streamlining the placement document for qualified institutional placement by listed entities. This builds on the simplification and streamlining undertaken for Rights Issue by listed entities. The proposal factors in the availability of information for listed entities in the public domain, and reduces or eliminates duplication of such information in the placement document. Making of disclosures has also been enabled in a summarized and concise form.3.2Such areas of disclosure being simplified include: Risk factors being specified in relation to the issue, the objects of the issue and the material risks (dispensing with generic risk factors being disclosed); Providing summary of financial position (dispensing provision of complete financial statements); Providing a summary of issuer’s business and the industry in which it operates.
Introduction of special measures to facilitate Voluntary Delisting of certain Public Sector Undertakings (PSUs)
The Board approved amendment to SEBI (Delisting of Equity Shares) Regulations, 2021 for introduction of a special measures for PSUs [other than Banks, Non-banking Financial Companies(NBFCs) and Insurance Companies] those which are under the ambit of any financial sector regulator) to undertake voluntary delisting through fixed price delisting process when the shareholding of Government of India as a promoter and/or other PSUs equals or exceeds 90%. Such measures include relaxations from requirement of two-third threshold for approving delisting by public shareholders and in the mode of computation of floor price.
PSUs [other than Banks, Non-banking Financial Companies (NBFCs) and Insurance Companies] in which aggregate shareholding of Government of India and/or any PSUs equals or exceeds 90% of total issued shares of the PSU, would be eligible for delisting under the relaxed route (Eligible PSUs)
For additional details: https://www.sebi.gov.in/media-and-notifications/press-releases/jun-2025/sebi-board-meeting_94657.html
