Sebi eases PSU delisting, relaxes ESOP rules for startups
New Delhi: The Sebi has rolled out two major regulatory changes—simplifying delisting norms for certain public sector undertakings and easing Employee Stock Option Plan (ESOP) rules for startup founders ahead of public listings.
In a notification dated September 1, Sebi introduced special provisions for voluntary delisting of PSUs where the government holds 90 per cent or more stake, excluding banks, NBFCs and insurance companies. These provisions relax the existing requirement of a two-thirds approval from public shareholders and permit delisting at a fixed price—at least 15 per cent above the floor price—regardless of trading frequency.
The floor price will be determined based on the highest of three benchmarks: the volume-weighted average price paid during the preceding 52 weeks, the highest price paid in the preceding 26 weeks, or the value assessed by a joint valuation report of two independent valuers. Funds due to public shareholders who do not tender their shares within a year of delisting will be transferred to a designated stock exchange account, where they can be claimed for up to seven years.
Separately, Sebi has amended ESOP rules to provide relief to founders of IPO-bound startups. Under the revised norms, employees identified as ‘promoters’ or part of the ‘promoter group’ in draft IPO papers can continue to hold or exercise ESOPs, Stock Appreciation Rights (SARs), or similar benefits granted at least one year before filing.
Earlier, promoters were barred from retaining such benefits and had to liquidate them before filing the draft red herring prospectus, a rule that particularly affected startup founders. The new framework aims to support companies preparing for domestic listings, including those pursuing reverse flipping by shifting their incorporation back to India.
Both reforms aim to boost market access by enabling smoother PSU exits with high government stakes and supporting startups through globally aligned ESOP rules, strengthening India’s ecosystem.
