Founders can now hold employee stock options post listing, says SEBI
In a bid to increase ease of doing business for market participants, the Securities and Exchange Board of India (SEBI) has approved proposals to allow founders to hold employee stock options even after listing, relax regulations for alternative investment funds (AIF), and allow public sector undertakings (PSUs) with minimal public shareholding to delist, among other actions.
In its board meeting that concluded on Wednesday, the markets regulator said that founders or promoters can now continue to benefit from employee stock options even after listing, if they started receiving them at least one year prior to filing for IPOs.
Aiding reverse flipping
Moreover, compulsory convertible securities (CCS) will be exempted from a minimum shareholding period of one year, akin to equity shares.
This will assist companies contemplating reverse flipping. Reverse flipping is when Indian start-ups, originally incorporated overseas, move their headquarters and ownership back to India. The regulation will now also include relevant persons other than just the founders.
Category I and II AIFs can now offer co-investment schemes (CIV) to 'facilitate AIFs and investors to co invest' and 'support capital formation in unlisted companies,' according to a statement from SEBI.
This initiative is in addition to the existing opinion for accredited investors to co-invest in unlisted entities through portfolio management system (PMS).
Angel investors
The board also approved proposals to ensure that only angel investors would need to be accredited investors (AI) now.
Moreover, AIs will be included as qualified institutional buyers (QIBs) for the limited purpose of investments into angel funds.
The floor and cap on investments by angel investors has been changed to ₹10 lakh to ₹25 crore.
Earlier, this threshold was ₹25 lakh to ₹10 crore. In addition to these, SEBI also offered settlement opportunity for venture capitalists (VCs) to migrate to AIF regulations.
The markets watchdog has also enabled PSUs, in which the Government of India holds more than 90% stake, to be delisted.
'There are five such companies,' SEBI Chairperson Tuhin Kanta Pandey said during a briefing.
In addition to these, the regulator also brought in other regulations that relaxed compliance for foreign portfolio investments (FPIs) exclusively investing in G-secs, simplified documents for qualified institutional placements (QIPs), and rationalisation of merchant banking regulations.
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