Key Approvals in SEBI’s Board Meeting dated June 18, 2025

The Securities and Exchange Board of India (SEBI) has approved several significant regulatory amendments aimed at enhancing market accessibility and ease of doing business in its 210^th board meeting held on June 18, 2025.

Key amendments announced by SEBI have been discussed below:

• Amendments to SEBI (ICDR) and SBEB Regulations for Ease of Doing Business
  SEBI has approved the following amendments to the SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021:
• relaxation for converted shares in offer for sale (OFS): SEBI has allowed equity shares arising from the conversion of fully paid-up compulsorily convertible securities (CCS) under approved schemes to be eligible for OFS. This facilitates participation in public issues and assists companies contemplating reverse flipping.
• expanded promoter contribution pool: relevant persons such as alternative investment funds (AIFs), foreign venture capital investors, banks, insurance companies, and promoter group can contribute converted CCS towards minimum promoter contribution (MPC).
• ease for founders holding employee stock option plans (ESOPs): founders who are classified as promoters at the time of filing draft red herring prospectus (DRHP) can continue holding and/or exercising ESOPs or similar benefits after an initial public offering, provided such benefits were received at least one year prior to filing the DRHP. This resolves a key concern for founders heading to listing.

• Key Amendments to REIT and InvIT Regulations
  SEBI has approved the following amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014 and SEBI (Infrastructure Investment Trusts) Regulations, 2014:
• clarification on ‘public’ unitholders: related parties of the sponsor, investment manager/manager, and project manager who are qualified institutional buyers (QIBs) will now be treated as ‘public’. However, the sponsor, sponsor group and managers will remain excluded from ‘public’ classification, even if they are QIBs.
• distribution flexibility for holding companies (HoldCos): HoldCos can now offset their negative net distributable cash flows against cash inflows from special purpose vehicles before distributing to real estate investment trusts or infrastructure investment trusts (InvITs).
• reduced minimum investment: the minimum allotment size for privately placed InvITs in the primary market has been reduced to INR 25 Lakhs, aligning it with the existing secondary market trading lot size.

• Approval to enhance ease of doing business for alternate investment funds (AIF) via co-investment and angel fund reforms
  SEBI has approved allowing category I and II AIFs to offer co-investment opportunities through a co-investment scheme (CIV Scheme) within the AIF structure. This facilitates AIFs and investors/managers/sponsors of AIFs to co-invest in unlisted companies. Previously, co-investment was only available through Portfolio Management Services (PMS), requiring investment managers to hold both AIF and PMS registrations. Under the new framework, a separate CIV Scheme will be launched for each co-investment in an investee company, with certain regulatory requirements relaxed compared to standard AIF schemes

Further, the following reforms have been approved for angel funds under the AIF framework:

• accredited investor requirement: angel investors will now be required to qualify as accredited investors (AIs), ensuring independent verification of investor status with updated thresholds that reflect current market realities.
• inclusion as QIBs: AIs will be recognised as QIBs for the limited purpose of investing in angel funds under SEBI’s (Issue of Capital and Disclosure Requirements) Regulations, 2018, allowing funds to offer opportunities to more eligible investors while complying with Companies Act, 2013.
• transition period and grandfathering: existing investments by non-AIs will be grandfathered, with a one-year glide path provided for full transition to the new regime.
• revised investment limits: the minimum investment limit has been reduced from INR 25 Lakhs to INR 10 Lakhs and the maximum raised to INR 25 Crores per investee company. The earlier 25% concentration cap per company has been removed.
• larger investor pool: angel funds may now raise capital from more than 200 AIs per investment and are allowed to make follow-on investments even if the investee company is no longer a start-up.

• Settlement scheme for venture capital funds (VCFs) for winding up provisions.
  SEBI has introduced a one-time settlement scheme for VCFs that have not wound up their schemes within prescribed timeframes but have completed migration to SEBI (AIF) Regulations, 2012. The settlement amount consists of two components: INR one lakh for delay up to one year in winding up schemes and INR 50 Thousand for each subsequent year, plus an amount ranging from INR one lakh to INR six lakhs based on the cost of unliquidated investments. All settlement expenses will be borne by the investment manager/Sponsor, not investors . Applications under this scheme must be submitted by January 19, 2026. This scheme addresses difficulties faced by VCFs in liquidating investments within their tenure while providing an expeditious settlement of past non-compliance without burdening investors.

Conclusion

SEBI is likely to notify amendment regulations and/or circulars in respect of these decisions in the coming days.