SEBI Board Meet: Big Relief for Startup Founders? What's More!

As the Securities and Exchange Board of India (SEBI) gears up for its crucial board meeting on June 18, all eyes in the financial and startup ecosystems are on the agenda. This isn't just another regulatory meeting—what’s at stake could mark a turning point for government-owned companies, infrastructure investment vehicles, and perhaps most significantly, for the country’s thriving startup community.

So, what’s brewing at SEBI, and why does it matter so much now?

A Long-Awaited Exit Plan for PSUs?

For decades, delisting a company from the Indian stock exchanges has been a tightly regulated and often expensive affair. When the promoter of a listed company—often the government, in the case of PSUs—wants to take the firm private, they are required to buy out public shareholders at a price determined by several valuation norms. One key method involves averaging the stock price over the past 60 trading days.

But here's the problem: PSUs are often traded at inflated valuations simply because they are backed by the government. So, when the Centre wants to delist a PSU that’s no longer commercially viable or has undergone strategic restructuring (like asset sales), the inflated market value pushes up the buyback price—making delisting prohibitively expensive.

This bottleneck has prevented timely and strategic exits. And SEBI seems to be saying: enough is enough.

In a proposal dated May 6, the markets regulator has suggested a special delisting framework exclusively for PSUs where the government already owns at least 90% of the shares. These companies wouldn’t need to comply with the minimum public shareholding rule before exiting the bourses. More importantly, they would be allowed to delist at a fixed price, as long as it’s at least 15% above the calculated floor price.

That’s not all — the process would bypass the cumbersome reverse book-building route, simplifying the delisting process and saving both time and money.

This could be a game-changer for the government, especially as it looks to rationalize its holding in underperforming PSUs or firms with outdated business models. If passed, this reform would open a faster, more cost-effective route for the Centre to restructure or privatize these firms without being shackled by market volatility.

REITs & InvITs: Coming to a Mutual Fund Portfolio Near You?

The June 18 meeting is also likely to bring cheer to the infrastructure and real estate investment segments. SEBI may greenlight a move to treat Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as equity instruments for index inclusion.

What does that mean in simpler terms? If implemented, REITs and InvITs could soon become a bigger part of equity-focused portfolios, especially mutual funds. SEBI is expected to allow mutual funds to increase exposure to these instruments up to 20% through equity schemes.

This is a strategic step to deepen retail participation in infrastructure and real estate sectors, which traditionally haven’t received the same investor love as tech stocks or blue-chip equities.

A Much-Needed Nod for Startup Founders?

Perhaps the most keenly awaited reform on the table is one that could bring sorely needed relief to India’s startup founders.

Currently, Employee Stock Ownership Plans (ESOPs) — a key incentive tool in the startup world — can only be issued to employees. Founders, despite often taking little to no salary in the early years, are left out of this benefit.

SEBI is now reportedly mulling over whether founders too can be granted ESOPs, putting them at par with employees when it comes to wealth creation and equity participation. For a generation of entrepreneurs who have poured their lives into building ventures with global aspirations, this move could legitimize and reward their long-term commitment.

In an era when startup IPOs are slowly picking up pace and Indian unicorns are preparing for public listings, this tweak could become a foundational change in the country’s startup policy landscape.

Streamlining Fundraising & Cleaning Old Cases

The board is also expected to discuss several administrative and procedural reforms. These include:

• Simplifying the Qualified Institutional Placement (QIP) process, which is often used by listed companies to raise capital from institutional investors. The aim: reduce paperwork, speed up execution.

• Introducing a settlement scheme for commodity brokers involved in the NSEL case, potentially offering closure to a long-standing issue in India’s financial market history.

Each of these items might seem like minor fixes in isolation—but together, they hint at SEBI’s clear intention to modernize market mechanisms and align regulations with evolving economic realities.

Why This Meeting Matters for Startups

From enabling faster exits for government-owned enterprises to encouraging startup innovation and investor access to alternative assets, the upcoming SEBI board meeting could shape the trajectory of multiple sectors in India’s economy.

If passed, these proposals won’t just tweak policies—they could redefine how India’s capital markets work for its entrepreneurs, its state machinery, and its everyday investors.

As India aims to deepen its capital markets, boost ease of doing business, and empower its new-age innovators, the outcomes of SEBI’s June 18 board meeting might just be a turning point.

One thing is clear—regulatory reform is no longer a backroom exercise. It is now center stage in India’s growth story.