Sebi plans more IPO reforms, streamlining share pledge norms & disclosures

Sebi is preparing new reforms to ease IPO processes, including simplified share pledge rules, rationalised offer documents, and stronger corporate governance standards

The Securities and Exchange Board of India (Sebi) is working on a new set of reforms for initial public offerings (IPOs), including streamlining the process for pledging shares of pre-IPO companies and rationalising disclosure requirements in offer documents, Chairman Tuhin Kanta Pandey said on Thursday.

 

Speaking at the SBI Banking & Economics Conclave 2025, Pandey said Sebi plans to simplify the summary section of IPO offer documents and make them available separately to investors for feedback.

 

“The process for IPO-bound companies whose pre-IPO shares are pledged is being streamlined. The proposed framework will ensure lock-in requirements are automatically enforced even if a pledge is invoked or released, thereby preventing listing delays. Consultation papers on these proposals will be issued soon,” Pandey said. 

The new measures build on recent initiatives to ease public fundraising, including steps to facilitate large IPOs and extensions in timelines to meet minimum public shareholding norms.

 

Pandey also welcomed recent Reserve Bank of India (RBI) moves — such as higher IPO financing limits and expanded bank lending against real estate investment trust and infrastructure investment trust units — as efforts to deepen capital markets.

 

On the debt side, he said Sebi is considering incentives for specific investor categories in the corporate bond market and is in discussions with the RBI to introduce bond derivatives.

 

The regulator is also prioritising reforms in the commodity segment, exploring participation by banks, insurers, and pension funds.

 

“A proposal to allow foreign portfolio investors to trade in non-cash-settled, non-agricultural commodity derivative contracts is also under examination,” Pandey said. 

 

He added that Sebi continues to step up surveillance of social media and trading platforms.

 

“Our in-house systems use AI and data analytics to detect manipulative trading patterns. We will keep our framework for algorithmic and high-frequency trading updated to ensure fairness and transparency,” he said.

 

Pandey called for tighter checks in small and medium-sized enterprise IPOs and stronger inter-institutional coordination to build investor trust.

 

Earlier in the day, addressing a corporate governance summit organised by Excellence Enablers, the Sebi chairman responded to concerns over IPO valuations.

 

“Sebi stands for transparency. We don’t decide valuations — that’s for investors to determine. The market should be free to price shares based on opportunity. Our job is to ensure disclosures are robust, with adequate comparatives in issue documents,” Pandey said.

 

His comments come amid concerns over steep valuations and weak market debuts by some startups and multinational subsidiaries.

 

On lapses by public sector undertakings in meeting independent director norms, Pandey said Sebi would urge the government to expedite appointments.

 

He also encouraged boards of listed companies to adopt governance scorecards to track culture and conduct alongside financial performance.

 

“Regulators look for an ethos where misconduct is a rare exception, not an accepted risk of business,” he noted.

 

Pandey said Sebi will review several regulations in consultation with industry stakeholders to simplify and contextualise them.

 

“Boards must oversee not just financial risks but also data ethics, cyber resilience, and algorithmic fairness. Governance today extends from the boardroom to the cloud,” he said.

 

He further urged companies to pursue credible environmental, social, and governance practices backed by measurable outcomes and independent assurance, rather than treating them as branding exercises. 

On the cards

• Rationalisation of IPO offer document summary, seek investor feedback
• Streamline norms for pledging of shares of IPO-bound companies, to ensure lock-in requirements 
• Discussions with RBI to allow bond derivatives, measures to deepen corporate bond markets
• Allowing FPIs in non-cash-settled, non-agricultural commodity derivative contracts
• Frameworks on algorithmic and high-frequency trading updated to ensure fairness and transparency