The Securities and Exchange Board of India (SEBI) announced new rules on Thursday that aim to fix two long‑standing problems in the Indian stock market: how pledged shares are handled after a company goes public and how easy it is for investors to understand an IPO’s filing documents.
What’s new for pledged shares?
Right now, any shares that were not owned by the company’s promoters have to stay locked for six months after the company is listed. But when a share is pledged to a lender, the depository that holds the shares can’t properly lock them, which forces companies to scramble at the last minute during compliance. SEBI’s solution is simple: let the depository mark pledged shares as “non‑transferable” for the lock‑in period. The company will also need to update its articles of association so shares stay locked whether the pledge is released or taken back.
The change has already been welcomed by non‑banking financial companies (NBFCs) that give loans against unlisted shares, because it will make it easier for them to monitor the risks involved.
New “offer document summary” for IPOs
Another reform seeks to replace the short, confusing “abridged prospectus” that every public issue must use. SEBI proposes a single, concise “offer document summary” that would appear on the websites of the issuer, its lead managers, the stock exchanges, and on SEBI’s own site. This summary would contain all the essential information investors need—key business data, risks, financial highlights, legal matters, and promoter background—making it easier for retail investors to read and compare offers.
The regulator says the change is designed to discourage investors from turning to informal or unverified sources when deciding on an IPO. A clearer, shorter disclosure should help them make more informed choices.
With these amendments, SEBI is working to streamline the IPO process, protect non‑promoter shareholders, and improve transparency for Indian investors.
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