SEBI Board Meeting Highlights: Regulator relaxes minimum public shareholding norms for big companies going for IPO

SEBI noted the launch of a new website titled ‘India Market Access’ (www.indiamarketaccess.in), developed as a dedicated platform for current and prospective FPIs. During SEBI’s interactions and roadshows with global investors, FPIs highlighted difficulties in navigating India’s regulatory landscape, citing the challenge of accessing information spread across different regulations and institutions. The lack of a centralized platform often made compliance processes difficult to comprehend. To address a long-standing demand for a streamlined and consolidated source of regulatory and procedural information, a single-window digital platform- ‘India Market Access’- has been developed. This portal serves as a 360° digital gateway to facilitate seamless entry and ongoing compliance for foreign investors in India’s securities markets.

SEBI approved the introduction of the Single Window Automatic & Generalised

Access for Trusted Foreign Investors (SWAGAT-FI) framework for FPIs and Foreign Venture Capital Investors (FVCIs) with the following objectives:

• Facilitate easier investment access for objectively identified and verifiably lowrisk foreign investors.
• Enable a unified registration process across multiple investment routes for these entities.
• Minimize repeated compliance requirements and documentation for such investors.

The SWAGAT-FI framework aims to unify, streamline, and standardize access for select categories of foreign investors who meet specified eligibility criteria. This initiative seeks to reduce regulatory complexity, simplify compliance, and enhance India’s global competitiveness as an investor-friendly destination.  (Read more)

SEBI also approved the reduction of minimum investment threshold for LVFs

from Rs 70 crore to Rs 25 crore. This is expected to attract substantial risk

capital under a lighter regulatory regime, facilitating greater capital formation. SEBI had issued consultation papers on August 8, 2025, seeking public feedback this. The proposals received broad public support. SEBI has incorporated

relevant suggestions and recommendations from its Alternative Investment Policy Advisory Committee (AIPAC) during the consultation process.

To enhance ease of doing business for Alternative Investment Funds (AIFs), SEBI has approved the following proposals:

• Introduction of a separate category of AIF schemes, limited exclusively to Accredited Investors only (AI-only schemes), and offering the scheme specific
  regulatory flexibilities in terms of less compliance around investor protection.
• Extension of additional relaxations and operational flexibilities to Large Value Funds (LVFs) for accredited investors.
• Provision for existing eligible AIF schemes to opt into AI-only or LVF classification, thereby availing associated benefits, subject to conditions prescribed by SEBI.

"We are now proposing a definition of / making amendments for AIF regulations to provide for AI-only funds. This will provide relaxations where AIF be considered as who know the risks better," says SEBI Chairperson Tuhin Kanta Pandey.

Only REIT approved for classification as equity, InvIT to remain as hybrid.

Market regulator on September 12 approved a plan to simplify fund-raising by large companies through an initial public offering. The Securities and Exchange Board of India said companies can now sell a minimum of 2.5% of their paid-up share capital in their IPO from the current 5% if their market capitalisation is above Rs 5 lakh crore after the listing. For companies with market cap between Rs 50,000 crore- Rs 1 lakh crore, the Minimum Public Shareholding (MPS) of 25% is to be achieved in 5 years as against current 3 years. (Read more)

Resident Indian non-individual sponsor manager to register as FPIs. This is already permitted for AIFs. Now, SEBI will also allow it for retail schemes. The condition of resident Indian non-individual sponsor/manager to be substituted with fund management entity or its associate, for IFSC FPIs.

The maximum resident Indian non individual as FME or its associate maybe specified to 10% of corpus of funds or of the AUM in case of retail schemes. This is varying in FPI regulation from the regulations of IFSCA, so this has been aligned to that.

SEBI has reduced the maximum permissible exit load for mutual funds to 3% from 5%.

Addressing the issue that under the current provision of Regulation 23(1) of the LODR, shareholder approval is required for related party transactions (RPTs) exceeding Rs 1,000 crore or 10% of the consolidated turnover of the listed entity, SEBI will introduce a scale-based threshold linked to the annual consolidated turnover as per the latest financial statements for determining material related party transactions (RPTs). (Read more)

Market regulator SEBI has mandates the appointment of two executive directors on board of market infra institutions

"We are addressing the issue that under the current provision of Regulation 23(1) of the LODR, shareholder approval is required for related party transactions (RPTs) exceeding Rs 1,000 crore or 10% of the consolidated turnover of the listed entity, whichever is lower, a requirement that has become onerous for listed entities with high turnover," said SEBI Chairperson Tuhin Kanta Pandey.

"For companies with a post-issue market capitalization above Rs 1 lakh crore, if public shareholding is less than 15% on the date of listing, the MPo of 15% must be achieved within five years and 25% within ten years; if public shareholding is 15% or more on the date of listing, the MPo of 25% must be achieved within five years from the date of listing," said SEBI Chairperson Tuhin Kanta Pandey.

There will be 7 percent additional quota for insurance companies and Pension funds in anchor quota so there will be 40 percent for insurance, Pension funds and MFs

The number of permissible anchor allottees above Rs 250 crore increased to 30 from 25.

"We are introducing four additional thresholds beyond the existing Rs 4,000 crore level: Rs 4,000 crore to Rs 50,000 crore, Rs 50,000 crore to Rs 1 lakh crore, Rs 1 lakh crore to Rs 5 lakh crore, and above Rs 5 lakh crore, and for companies with a post-issue market capitalization of more than Rs 5,500 crore but not exceeding Rs 1 lakh crore, it is proposed to revise the minimum public offer from the current requirement of 10% of the post-issue market capitalization to Rs 1,000 crore plus at least 8% of the post-issue market capitalization, thereby creating a scale-based threshold," said SEBI Chairperson Tuhin Kanta Pandey.

SEBI board clears proposal for mega IPO with less stake dilution and more time to comply with minimum public shareholding norms. Government will change in SCRR post this SEBI board recommendation. The number of permissible anchor allottees above Rs 250 crore increased to 30 from 25.

Market regulator Securities and Exchange Board of India (SEBI) may clear major proposals related to ease of doing business in its board meeting scheduled on September 12. Sources told Moneycontrol that the key proposals may include easing stake dilution for mega initial public offerings (IPOs), expanding rating agency activities, revamping RTA and broker rules, granting equity status to REITs, InvITs, introducing accredited investor AIF schemes and strengthening exchange governance as well as easing norms for investment advisors and research analysts.

Global brokerage firm Jefferies flagged the speculation around extending expiry to fortnightly/monthly, with or without same-day expiry and that speculation around expiry hasn't been confirmed by SEBI or exchanges.

However, Jefferies said scenario run for BSE and Nuvama. Potential impact could drive 20–50% cuts to FY27 EPS for BSE and 15–25% for Nuvama, said Jefferies.

Jefferies said shift to fortnightly expiry and separate settlement seems priced in, adding that the September 12 SEBI board meeting will be watched keenly.

In case the expiries are shifted to fortnightly and kept at separate days for both NSE and BSE, Jefferies believes that the industry index options notional Average Daily Turnover (ADTO) could fall by 55% and the Premium Average Daily Turnover could fall by 45%.

Although Jefferies expects BSE's market share to remain stable at 29% in August, its options revenue in financial year 2027 to fall by 38%, leading to a 22% fall in consolidated revenue and a 21% fall in net profit.

SEBI could float a consultation paper on ending weekly F&O contracts within a month, CNBC-TV18 reported. The market regulator is planning transition to monthly expiries with defined glide path and may consider same-day expiry across exchanges, the channel reported citing sources.

SEBI Board is likely to be briefed on longer derivative tenures on September 12 with consultations with exchanges starting next week, added CNBC-TV18.

The Sebi board may also approve a proposal to introduce a single-window system for low-risk foreign investors entering India’s securities market. The move is intended to simplify compliance processes and boost the country’s appeal as an investment hub.

Brokers will be allowed access to Sebi-approved activities while facing enhanced client protection requirements. The proposal also bans unauthorized schemes to prevent investor harm.

Criteria for Qualified Stock Brokers will now be based on measurable performance metrics and stricter governance standards, ensuring higher accountability.

The draft rules revise definitions for algorithmic trading, proprietary trading, and clearing members. Outdated terms, such as "small investor," are being removed to reflect modern market practices.

The proposed regulations include mandatory Sebi approval for any change in control of broker entities. Brokers will also be required to promptly disclose material changes affecting their operations.

Sources said the Sebi board may soon clear a revamped set of stock broker regulations aimed at aligning with evolving market practices. The update is designed to strengthen governance, enhance client protection, and improve compliance standards.

Listed on stock exchanges, REITs and InvITs offer investors a combination of steady income through distributions and potential capital appreciation, making them an attractive option for long-term wealth creation.

If reclassified as equity, mutual funds would be allowed to include REITs and InvITs in their equity schemes. This could broaden access for retail investors and encourage higher participation in these investment vehicles.

The SEBI board may discuss the potential reclassification of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as equity instruments. Currently, these instruments are treated as hybrids, containing both debt and equity characteristics.

Any marketing material or rating reports related to these services must carry explicit disclaimers highlighting the non-SEBI nature of the activity.

To maintain segregation, all non-SEBI activities must be conducted through dedicated Separate Business Units (SBUs). These units must have distinct staff, records, and grievance mechanisms to ensure clear separation from regular operations.

This move is part of broader efforts to reduce business restrictions on regulated entities, providing them greater flexibility to operate across multiple sectors.

The board may allow Credit Rating Agencies (CRAs) to rate financial instruments regulated by other financial sector authorities, including the RBI, IRDAI, PFRDA, IFSCA, MCA, and IBBI.

At present, the Listing Obligations and Disclosure Requirements (LODR) mandate shareholder approval for RPTs above Rs 1,000 crore or 10% of a company's turnover. The proposed framework would replace this fixed limit with a more flexible, turnover-based approach.

The new system would link materiality limits to a company's turnover: For firms with turnover up to Rs 20,000 crore, RPTs exceeding 10% of turnover would be deemed material. For turnover between Rs 20,001 crore and Rs 40,000 crore, the limit would be Rs 2,000 crore plus 5% of the incremental turnover. For turnover above Rs 40,000 crore, the cap would be Rs 3,000 crore plus 2.5% of the incremental turnover, subject to a maximum of Rs 5,000 crore.

The proposed framework is designed to make RPT compliance less onerous while safeguarding the interests of minority shareholders.

Sources say that the SEBI board is likely to discuss and approve a new threshold-based system for determining the materiality of related party transactions (RPTs). The move aims to align compliance requirements with the turnover of listed entities.

If the new slots for insurance or pension funds remain unfilled, the unsubscribed portion could revert to mutual funds. Officials believe this flexibility would help diversify the anchor investor base while ensuring optimal utilisation of allocations.

SEBI may also allow insurance companies and pension funds to join mutual funds in the reserved anchor quota. Under the proposal, the reserved allocation would rise from 33% to 40% of the anchor book, with mutual funds continuing to hold 33% and the remaining 7% earmarked for insurance and pension funds.

For IPOs with an issue size of Rs 250-Rs 500 crore, the number of permitted anchor allottees is proposed to increase from 25 to 30. This adjustment is intended to broaden participation in this category of public offerings.

The Securities and Exchange Board of India (SEBI) is expected to consider proposals to amend the allocation norms for anchor investors in initial public offerings (IPOs). The changes aim to attract larger investors and simplify the overall process, according to sources.

For entities with a post-issue market cap exceeding Rs 5,00,000 crore, the proposed dilution requirement is Rs 15,000 crore plus 1%, subject to a minimum of 2.5% public float.

Companies valued between Rs 1,00,000 crore and Rs 5,00,000 crore may need to float an IPO of at least Rs 6,250 crore plus 2.75%. Depending on their shareholding levels, they could get up to 10 years to meet the minimum public shareholding mandate.

For businesses with a post-issue market capitalisation between Rs 50,000 crore and Rs 1,00,000 crore, the minimum issue size could be set at Rs 1,000 crore plus 8%. They will be required to achieve 25% MPS within five years, instead of the current three-year period.

The market regulator's board is likely to approve a proposal to relax stake dilution norms for very large companies. The move is designed to let such firms launch smaller initial public offerings while giving them more time to meet minimum public shareholding (MPS) targets. Sources said the aim is to ease immediate pressure on issuers while still ensuring gradual compliance.

Several of these proposals have already undergone public consultation, signaling a broader drive to refine market regulations. This will be the third board meeting under chairperson Tuhin Kanta Pandey, who assumed office on March 1. The panel may also clear measures to encourage large issuers to list on Indian exchanges.

Other items include expanding the scope of activities for credit rating agencies and according equity-like status to real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

The agenda is expected to cover simplified compliance for foreign portfolio investors (FPIs) and eased rules for accredited investors participating in select alternative investment funds (AIFs).

One of the key proposals is to relax IPO eligibility requirements for very large companies. The board may also give such firms a longer window to meet minimum public shareholding obligations.

The Securities and Exchange Board of India (Sebi) is set to review a host of regulatory changes at its meeting on Friday.