Sebi Implements Major Reforms to Attract Foreign Investors and Enhance IPO Landscape, ETLegalWorld
Mumbai: Sebi on Friday unveiled reforms easing minimal dilution norms for IPO-bound corporations, and making a single-window system for low-risk overseas buyers like sovereign wealth funds, central banks, and retail funds, eliminating repeated paperwork.The leisure comes amid rising overseas outflows, pushed by steep US tariffs, weak earnings and wealthy valuations. Overseas buyers have withdrawn $11.7 billion from Indian shares and debt in 2025.
It additionally tightened governance at inventory exchanges by mandating two govt administrators, splitting critical-operations (buying and selling, clearing, settlement) and regulatory-compliance (threat, investor grievances) roles.
For issuers with a market cap of Rs 1-5 lakh crore, the minimal public supply has been raised to Rs 6,250 crore and a minimum of 2.8% of post-issue market cap, in contrast with Rs 5,000 crore and 5% earlier. Companies itemizing with lower than 15% public float will now have 10 years to meet the 25% minimal public shareholding requirement, whereas these beginning with 15% or extra will get 5 years. The relaxed timelines, as soon as notified by govt, may even apply to corporations but to comply underneath current guidelines.
Anchor investor guidelines have been liberalised. The total quota has gone up to 40% from one-third, with life insurers and pension funds having a share within the reserved pool. One-third will stay earmarked for mutual funds, and any shortfall in subscriptions from insurers and pension funds will revert to them. The variety of permissible anchor buyers has additionally been expanded, with a minimal allotment dimension of Rs 5 crore.
To make India extra engaging for abroad capital, Sebi authorized the Swagat-FI framework that offers “trusted” overseas portfolio and enterprise buyers – reminiscent of sovereign funds, central banks and regulated retail funds – single-window entry with a 10-year registration and KYC cycle, in opposition to 3 years. They may even be exempt from the 50% combination contribution cap on NRIs, OCIs and resident Indians. Complementing this, Sebi and market infrastructure establishments launched the India Market Access portal to present step-by-step steering on FPI registration, documentation and compliance.
In the mutual fund area, the regulator decreased the utmost exit load to 3% from 5% and revised distributor incentives to encourage inflows from smaller cities and girls buyers. Distributors can earn up to 1% of the primary utility quantity or Rs 2,000 for brand spanking new buyers from past the highest 30 cities, whereas further commissions will likely be paid for onboarding new girls buyers.
Sebi has simplified laws for related-party transactions, introducing a scale-based strategy for shareholder approval. High-value offers now require a vote, whereas low-value transactions are exempt from disclosure. For corporations with a turnover of Rs 20,000 crore, approval is required for transactions exceeding 10% of turnover. The threshold for corporations with a turnover over Rs 40,000 crore has been raised considerably from Rs 1,000 crore to Rs 5,000 crore.
