Market regulator Securities and Exchange Board of India (SEBI), at its 211th board meeting in Mumbai, approved a raft of reforms aimed at easing initial public offering (IPO) norms for large companies, broadening institutional investor participation and simplifying compliance for market participants across the ecosystem. With IPO-bound giants like National Stock Exchange (NSE) and Reliance Jio Infocomm Ltd on the horizon and increasing global scrutiny of Indian regulations, the timing of these measures signals a strategic push to position India as a top-tier investment destination.
A key decision was the recommendation to amend the Securities Contracts (Regulation) Rules, 1957, to relax minimum public offer (MPO) and minimum public shareholding (MPS) norms for companies with market-capitalisation exceeding Rs50,000 crore.
Currently, issuers above Rs1 lakh crore market cap must dilute at least 10% of equity within three years. SEBI has proposed that companies valued between Rs50,000 crore and Rs1 lakh crore list with 8% public float (minimum Rs1,000 crore), with five years allowed to meet the 25% MPS rule.
For companies valued between Rs1 lakh crore and Rs5 lakh crore, the MPO requirement will be Rs6,250 crore and at least 2.75% stake, with longer timelines of up to 10 years to achieve 25% public shareholding if the initial float is under 15%.
The changes are expected to benefit mega IPOs such as those planned by NSE and Reliance Jio Infocomm, where large-scale stake dilution has been a deterrent due to market absorption challenges.
The market regulator at its board meeting, also approved amendments to the Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, to broaden anchor investor participation.
- The current allocation caps have been merged into a single category for up to Rs250 crore with five to 15 anchor investors.
- Life insurance companies and pension funds will now join domestic mutual funds in the reserved anchor portion.
- The overall anchor quota has been raised from one-third to 40%, enhancing long-term investor participation.
This move is expected to strengthen the credibility of IPO books and attract stable capital from institutional players.
Ease of Doing Business in Related-party Transactions
SEBI also cleared amendments to the Listing Obligations and Disclosure Requirements (LODR) framework to simplify related party transaction (RPT) compliance. Key changes include scale-based thresholds, simpler disclosures for smaller deals and clarifications on exemptions for routine retail transactions with directors and key personnel.
Boost for Foreign Investors
In a significant step, SEBI introduced the SWAGAT-FI (single window automatic and generalised access for trusted foreign investors) framework. It will streamline registration and compliance for low-risk foreign investors such as sovereign wealth funds, pension funds and central banks. Registration validity will be extended to 10 years, with reduced documentation and simplified KYC.
Additionally, SEBI launched the ‘India Market Access’ portal, a one-stop digital gateway for foreign portfolio investors (FPIs) to access regulatory and compliance information.
Mutual Fund Reforms
To strengthen investor protection and inclusivity, SEBI announced:
- Reduction of maximum exit load cap from 5% to 3%.
- Incentives for distributors to bring in new investors from B-30 cities (beyond top-30 cities).
- Additional incentives for onboarding women investors, promoting financial inclusion.
Other Key Approvals by the SEBI Board
- REITs reclassified as equity, aligning with global practice and paving way for higher mutual fund participation.
- Relaxed framework for alternative investment funds (AIFs) with accreditation-based eligibility, reduced thresholds for large value funds and exemptions from some compliance.
- Expansion of the ‘Strategic Investor’ category for REITs and InvITs to include a broader set of institutional investors.
- Plan to establish local SEBI offices in key state capitals including Chandigarh, Jaipur, Lucknow, Guwahati, Bhubaneswar, Vijayawada, Hyderabad and Bengaluru.
- New regulations for registrars to an issue and share transfer agents (RTAs) with activity-based oversight.
- Simplified compliance for investment advisers (IAs) and research analysts (RAs), including relaxation of educational and registration norms.
- Stronger governance norms for market infrastructure institutions (MIIs) with independent executive directors mandated for regulatory and compliance oversight.
