Sebi Board Meeting: Voluntary Delisting For PSUs, Revised AIF, And ESOP Norms On Agenda

Sebi Board Meeting: Securities and Exchange Board of India (Sebi) chief Tuhin Kanta Pandey is all set to chair his second board meeting as chairman on June 18, 2025. The market watchdog is likely to announce multiple regulatory reforms aimed at enhancing the ease of transacting in the securities market. In the days prior to the meeting, Sebi has also released several draft papers which are likely to be discussed in the upcoming meeting.

These draft papers detail the proposed regulatory reforms that Sebi plans to introduce. Key among the reforms are Sebi’s voluntary delisting norms for public sector undertakings (PSUs) and revised norms for allotting employee stock ownership plans (ESOPs). Here’s a look at some of the key reforms and regulations the market regulator is expected to discuss at its upcoming meeting:

Voluntary Delisting For PSUs

Earlier in May 2025, Sebi had released a consultation paper on voluntary delisting of PSUs. Sebi said in the consultation paper that some PSUs either have thin public float and/or have posted poor financials. Even if such firms are profitable, they may have outdated product lines. However, since the government is a major stakeholder in such companies, investors invested in them to remain insulated from risk, which in turn increases their market price, making them much higher than the book value of the stocks.

To address this issue, the Sebi proposed a ‘separate carve out’ for the delisting of such companies. Notably, those companies in which the government’s stake is over 90 per cent of the total issued shares will be eligible for voluntary delisting as per the working paper. Sebi is expected to deliberate on the proposed norms at its board meeting on June 18, 2025.

Revised ESOP Norms For Start-ups

According to a report by the Economic Times, Sebi is also likely to discuss a proposal which will enable start-up founders and promoter entities of companies that are soon to go public to hold and exercise the ESOP granted one year prior to the launch of the public issue. At present, ESOPs can be given to employees of the company, but promoters are not entitled to receive the stock options.

Treatment of REITs and InvITs As Equity

Earlier in April this year, Sebi also released a consultation paper which said that since real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) combine features of both equity instruments and debt market instruments, thus they should be classified as “equities”. However, earlier in 2017, Sebi had classified REITs and InvITs as hybrid instruments. Further Sebi had also mentioned that Reits and InvITs are classified as equity instruments in other countries. The proposal to re-classify REITs and InvITs is likely to be discussed in the board meeting tomorrow.

Revised AIF Norms

According to a report by NDTV Profit, Sebi is expected to discuss proposals made in a consultation paper dated May 9, 2025 in its board meeting tomorrow. The proposals include a provision which will enable alternative investment fund (AIF) investors to invest in unlisted companies vis-a-vis a co-investment vehicle (CIV). At present, AIF investors who wish to do so can only make the investment outside the AIF structure. Such investments are typically made through portfolio management services (PMS). However this method has several limitations. Thus, Sebi is likely to come up with a provision through which AIFs can launch separate CIVs for co-investment opportunities.