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Informist, Thursday, Nov. 13, 2025

 

--SEBI releases consultation paper on increasing retail participation in IPO 

--SEBI consultation paper mulls ease of doing business norms in IPO 

--SEBI mulls treating non-promoters' pledged shr of IPO-bound co as locked-in 

--SEBI proposes IPO cos submit offer document summary along with DRHP 

 

MUMBAI – The Securities and Exchange Board of India has proposed that pledged shares of non-promoters of companies, which have filed papers for listing on the exchanges, be treated as locked-in for six months, according to a consultation paper floated by the regulator Thursday. It has also proposed that companies that are bound for initial public offer submit a summary document along with the draft papers to make it easier for retail investors to understand the offer.

 

The existing system of depositories does not allow lock-in of pledged shares, which leads to challenges for the issuer. "In case of certain issuers, where the number of shareholders is large or such shareholders (non-promoters) are untraceable or unwilling to cooperate, the challenges are further compounded due to the prescribed timelines in the IPO process," SEBI said.

 

The pledged shares will remain locked-in in the account of the pledgee if the pledge is invoked or released within the six-month period. Companies should amend their articles of association to incorporate the changes related to lock-in norms, SEBI said.

 

SEBI also proposed that companies filing a draft red herring prospectus summarise its details in a separate document along with the DRHP. "Mandating a focused, concise and standardized summary of offer document can enhance investor comprehension, improve information accessibility and may lead to increase in the engagement of retail investors in the IPO process," SEBI said. With this, the regulator is also proposing to do away with the requirement of abridged prospectus, which is submitted along with the red herring prospectus.

 

SEBI pointed out that retail investors are relying on unregulated sources such as grey market trends and social media for making investments. With the additional summary document, SEBI hopes retail investors will reduce their dependence on unregulated sources. The requirement for an additional offer summary document will apply to mainboard and small and medium enterprise IPOs, pre-filled IPOs, and follow-on public offers.

 

The public can submit their comments on the consultation paper latest by Dec. 4. Comments can be submitted on the SEBI website under "public comments" or sent to "consultationcfd@sebi.gov.in".  End

 

Reported by Anshul Choudhary

Edited by Ashish Shirke

 

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