Sebi Clears ESOP Path for Startups, Listed Companies

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- NESIL STANEY

The Securities and Exchange Board of India (Sebi) has announced comprehensive rules for Employee Stock Option Plans (ESOPs) on Wednesday, specifically targeting startup founders and listed companies.

The measures are 'founder-friendly' and are expected to bring more startups into the public market and align with global best practices, said experts.

"The clarity on ESOPs for startup founders, this marks SEBI's strong commitment to innovation, deeper capital access, and sustained alignment among investors, founders, and fund managers." Said Gopal Srinivasan, chairman and managing director of TVS Capital Funds, also a senior board member of IVCA, the venture funds industry association.

Previously, founders were considered "promoters" at the time of IPO filing and were ineligible for ESOPs. Sebi has now relaxed this rule, allowing startup founders to retain their ESOPs even after listing, provided the ESOPs were granted at least one year before the IPO filing.