The Securities and Exchange Board of India (SEBI) has introduced significant reforms to enhance market governance, investor protection, and reduce regulatory burdens. On Wednesday, SEBI’s board approved stricter regulations for Initial Public Offerings (IPOs) by small and medium enterprises (SMEs), a revamp of investment banking norms, and an expanded definition of Unpublished Price Sensitive Information (UPSI).
Among the key changes, SEBI has imposed new profitability criteria for companies seeking to list via IPOs. Additionally, it has set limits on offer-for-sale (OFS) transactions and introduced phased lock-in periods for promoters. The new rules also include provisions to limit conflicts of interest by preventing merchant bankers from managing public issues if their key personnel hold more than 0.1% of the issuer’s shares.
In a bid to streamline the process, SEBI has mandated specific timelines for deploying funds raised through New Fund Offers (NFOs) and simplified compliance requirements for Asset Management Companies (AMCs) employees. Furthermore, SEBI has approved the creation of an agency to assess risk-return metrics for investment advisors and algorithmic traders.
To ensure faster transactions, SEBI has also made electronic payments compulsory for demat account holders.
On the investment banking front, SEBI introduced two categories based on net worth—Category 1 for activities with a ₹50 crore minimum and Category 2 for entities with a ₹10 crore minimum, excluding equity issues on the main board. Merchant bankers must meet revenue thresholds over three years to retain their registration, with specific requirements for liquid net worth and underwriting limits.
In line with improving market transparency, SEBI expanded the definition of UPSI to cover additional material events. Additionally, the regulator codified the rights of Debenture Trustees (DTs), streamlined fiduciary roles, and standardized Debenture Trust Deeds.
SEBI also introduced new rules for Environmental, Social, and Governance (ESG) rating providers, mandating transparency and the separation of non-regulated activities. For High-Value Debt Listed Entities (HVDLEs), the threshold for identification has been increased from ₹500 crore to ₹1,000 crore, with enhanced governance norms.
Further, SEBI is taking measures to bolster accountability by imposing responsibilities on market participants using Artificial Intelligence (AI) tools to ensure compliance and safeguard data.
These sweeping changes aim to strengthen India’s financial market infrastructure, providing greater clarity and protection for investors.
 has introduced significant reforms to enhance market governance, investor protection, and reduce regulatory burdens. On Wednesday, SEBI's board approved stricter regulations for Initial Public Offerings (IPOs) by small and medium enterprises (SMEs), a revamp of investment banking norms, and an expanded definition of Unpublished Price Sensitive Information (UPSI).){kind=link}