SEBI clears new PSU delisting framework, simplifies compliance for FPIs and startups

The Securities and Exchange Board of India (SEBI) board on Wednesday, June 18, approved several important proposals aimed at streamlining regulations, easing compliance, and boosting investment activity across sectors.

A key decision was the introduction of a separate voluntary delisting framework specifically for public sector undertakings (PSUs) where the government holds a stake of 90% or more. Under this new framework, delisting will occur through a fixed-price process, with the price set at least 15% above the floor price. This mechanism is designed to ensure fair value for minority shareholders while providing a clear exit route.

SEBI also focused on simplifying documentation requirements for qualified institutional placements (QIPs) and rights issues. The revised framework rationalises disclosures related to risk factors, financial summaries, and issuer business information, thereby reducing procedural complexities and enhancing clarity for both issuers and investors.

In a bid to encourage greater foreign investment in Indian government bonds (IGBs), SEBI relaxed compliance norms for foreign portfolio investors (FPIs) who invest exclusively in these securities. A notable change allows custodians to avoid setting up separate entities for financial services, lowering operational hurdles and potentially attracting more foreign capital.

Further, SEBI authorised category 1 and 2 alternative investment funds (AIFs) to offer co-investment schemes, opening new avenues for investors to participate alongside fund managers and potentially increasing capital inflows into promising ventures.

Regulations for portfolio managers were also updated, with changes to disclosure documents aimed at improving transparency and protecting investors. Additionally, companies are now prohibited from creating physical securities for corporate actions, reinforcing the ongoing transition to a fully electronic securities ecosystem.

Another significant update allows investment advisers and research analysts to meet their deposit requirements using liquid and overnight mutual funds. This provides a more flexible and potentially higher-yielding alternative to traditional fixed deposits, easing regulatory compliance for market intermediaries.

The board reiterated the mandate requiring select shareholders, including directors and key managerial personnel, to hold their shares in dematerialised form before filing IPO documents. This promotes transparency and reduces risks associated with physical shareholding.

It was the second board meeting under SEBI Chairman Tuhin Kanta Pandey, who took office on March 1. The board’s decisions underline a strong commitment to simplifying regulations, enhancing investor protection, and fostering a more vibrant and efficient capital market in India.