What Sebi Reforms Mean for PSUs, Others

In his second board meeting as chairperson of the Securities and Exchange Board of India (Sebi), Tuhin Kanta Pandey approved a sweeping set of reforms for startups and PSU delisting norms, tweaks to the structures of alternative investment funds (AIFs) and angel funds, and easier procedures for intermediaries.

- Neha Joshi

Mint breaks down the key decisions from Sebi's 210th board meeting, and what they mean.

What did Sebi decide for promoters of startups?

Sebi permitted founders designated as promoters to retain employee stock options (ESOPs), provided these were granted at least a year before the company filed its draft red herring prospectus (DRHP). Earlier, such holdings had to be liquidated before the listing, creating regulatory headaches for startup founders.

"The move by Sebi is intended to ease the pain of many promoters who started the business, going from employee to entrepreneur," said Archana Balasubramanian, partner at Agama Law Associates.

But Ketan Mukhija, senior partner at Burgeon Law, said, "Determining the start of the cooling-off period and ensuring there are no indirect grants will require careful documentation."

How is Sebi easing PSU delistings?

Public sector undertakings (PSUs) in which the government and other PSUs hold at least a 90% stake can now delist without the two-thirds public shareholder approval previously mandated. The new fixed-price route requires a 15% premium to the calculated floor price, based on historical data and independent valuation.