Mint explanator: What did Sebi decide at the 210th Council meeting?

Copyright © HT Digital Streams Limit all rights reserved. Neha Joshi 5 min read 19 Jun 2025, 02:41 pm ist Sebi Chairman Tuhin Kanta Pandey. Photo: PTI summary of ESOP relief for founders of the beginning, simplified exemption of norms for PSUs, and relaxed rules for FPIs indicate the pivot of the market regulator to lighter, business-friendly attitude. In his second council meeting as chairman of the Securities and Exchange Board of India (Sebi), Tuhin Kanta Pandey approved a quick set of regulatory changes aimed at reducing friction over capital markets. With reforms for startups and PSU sophistication of norms, the adjustment of the structures of alternative investment funds (AIFs) and Engel Funds, and easier intermediar procedures, the regulator ruled to strengthen the agenda of the ‘ease of business’. Mint breaks down the most important decisions of the 210th council meeting of Sebi, and what it means to investors, startups and the broader financial ecosystem. What did Sebi decide for promoters of startups? Sebi allowed founders who were appointed promoters to retain employee options (ESOPs), provided it was granted at least a year before the company submitted its draft Red Herring Prospectus (DRHP). Earlier, such possessions had to be liquidated before the listing, creating regulatory headaches for founders of the beginning, already under pressure to become unicorns and reward their early investors with rich exits. Many are now in watch-and-watch mode. “The move by Sebi is intended to relieve the pain of many promoters the business started, from employee to entrepreneur,” says Archana Balasubramanian, partner at Agama Law Associates. Read also | Mint explanator: How Sanjiv Bhasin’s alleged stock manipulation scheme Shubha Yadav, partner at RS Law Chambers, uncovered, called the change “clearly and targeted”, adding that the one-year cooling period only the share-based benefits, including ESOPs that should be granted one year before submitting the DRHP. Ketan Mukhija, senior partner at Burgeon Law, said: “The start of the cooling -off period said there are no indirect allowances that carefully need documentation.” How do Sebi Psu displacements relieve? Public Sector (PSU) businesses in which government and other PSUs have a stake of at least 90% can now be able to deprive parts of two -thirds approval. The new fixed price route requires a premium of 15% above the calculated floor price, based on historical data and independent valuation. Prashant Mishra, founder and CEO of Agnam Advisors, said that government ownerships now have a clearer path to leave the stock market through a simple pricing system, making it easier for large institutional investors to understand what’s going on. Legal experts said one critical legal question remains: How will the rights of minority shareholders be protected? Abhishek Dadoo, partner at Khaitan & Co, said this framework enables the exemption of PSUs that would otherwise struggle to go out, but come at the expense of thinning minority protection. “The Detelling Prize is related to an independent valuation, not the historical market price-which can be higher. The removal of the public mood is effectively not the process.” He added. Can AIF investors invest easier now? Category I and II AIFs can now offer co-investment schemes within their structure, giving accredited investors the chance to invest with the AIF in unlisted businesses. “The approval of the co-investment vehicle is a breakthrough that will significantly expand the private capital participation in India,” said Gopal Srinivasan, chairman and managing director, TVS Capital Funds. “In global practice, 15-20% of the corpus of a fund comes through such co-investments, and it is now within reach,” he said. Also read: Sebi’s new fee platform is aimed at protecting investors. But not many did not accept it, but Nandini Pathak, partner at Bombay Law Chambers, emphasized caution and said that the suitability of co-investors will hang of their accreditation status. “Restrictions may continue around timing and conditions. These advisory rights are considered for listed co-investments,” she said. Pathak has suggested that fund managers adopt appropriate internal controls and best execution practices, and provide adequate disclosures to the most important AIF investors. How do SEBI change investment norms for signal funds? Only accredited investors (AIS) can now invest in signal funds. AIS undergoes independent verification to ensure compliance and protect investors. Earlier investments by non-AIs are with a transitional period of one year. The investment limits in startups have expanded from £ 10 lakh to £ 25 crore), the 25% concentration cap has been removed, and more than 200 accredited investors can invest together. Drivers must retain ‘skin in the game’ of at least 0.5% or £ 50,000 per agreement. According to experts, AIFs have long attracted individuals with high net value (HNIs) and relatively sophisticated investors, which gives SEBI more room to relax norms and make it easier to do business. “It is now possible for fund managers to give advice on listed securities so they can provide advisory services,” says Kush Gupta, director of SKG Investment & Advisory. He added that reviewing investment thresholds would give more flexibility to choose their investments. What relief did SEBI offer to FPIs investing only in government security? Sebi has released compliance norms for foreign portfolio investors investing only in government securities (DC FPIs). Important measures include longer KYC judging cycles, and it is not necessary to disclose investor group structures. NRIS and OCIS can now be ingredients of DC FPIs without restrictions, and material changes can be reported within 30 days, from 7 days. These steps are aimed at attracting foreign capital, as Indian G-SECs have been included in global bond indices since 2024-25. Also read: Sebi is engaged in venture capital funds to smooth the transition to AIF “The risk profile for FPIs investing only in G-SECs is now different notching as a Mix portfolio of FPI with significant relief,” says Manisha Shroff, partner at Khaitan & Co. “The relaxation of SEBI is currently only for existing and prospective FPIs that invest exclusively in G-SECS. The fine print on how long such FPIs have to stay only sovereign and if there will be different and quickly tracking registration process, still have to be seen.” What is the new array scheme for brokers involved in the Nsel case? Sebi has set up a one -time monetary settlement plan based on the amount and value of trades. Brokers who face the maintenance actions – but are not mentioned in charge pages or declared defaulters – can choose to close the proceedings. The settlement mechanism for Nsel-related brokers is a daring move to unquestionable legacy maintenance actions, said Amit Tungare, managing partner at Asahi Legal. “Sebi will have to ensure that the settlements do not dilute liability, especially in cases involving systemic failure,” he said. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #sebi #Markets Premium #Mint-Explainer #Digital Exclusives Read Next Story