SEBI proposes relaxed norms for large IPOs

The Securities and Exchange Board of India (SEBI) is undertaking significant reforms to enhance market integrity, facilitate large initial public offerings (IPOs), and strengthen investor protection against manipulation and fraudulent practices.

SEBI Whole-time Director Kamlesh Chandra Varshney said the regulator has floated a consultation paper proposing to extend the deadline for achieving 25% public shareholding to 10 years for exceptionally large companies.

Currently, companies must meet this requirement within five years of listing. This relaxation, he said, will make large IPOs such as that of the National Stock Exchange more feasible.

Varshney added that SEBI is advising merchant bankers and anchor investors to adopt “realistic and conservative valuations” in IPOs to avoid post-listing price erosion that could dent retail investor confidence.

SEBI is also intensifying its crackdown on unregistered investment advisors and financial influencers who mislead retail investors through social media.

Varshney said the regulator has associated with Meta for an advertisement verification process to ensure only registered entities promote market-related content, and is working to extend this to other platforms. A dedicated monitoring team is flagging illegal posts to Google and Meta, which now take them down within hours.

He said enforcement actions are being taken against violators, including TV experts and penny stock manipulators, while clarifying that SEBI has no objection to genuine “educators” but will act against those who, under that guise, provide unregistered trading advice or lure investors with false promises.

Varshney also said that SEBI is taking investor education to the “next level” with campaigns and outreach programmes in universities and schools to empower investors to make informed choices and distinguish genuine advisors from fraudsters.