Captains of Startup Inc to Retain Esops Post-IPO
The board of India's capital markets regulator on Wednesday cleared a raft of measures to enable ease of doing business, including allowing startup founders to continue holding
employee stock options
(Esops) even after listing, extending co-investment opportunities to alternative investment funds, and permitting voluntary delisting of public sector companies.
Currently, rules require founders to be classified as promoters at the time of filing of initial public offering (IPO) documents. However, once listed as promoters, they are ineligible to hold or be granted share-based benefits. If they hold Esops at the time of filing of offer documents, they are required to liquidate such benefits before the IPO.
'This provision has been found to be impacting founders,' Sebi chairman Tuhin Kanta Pandey said.
They are 'classified as promoters at time of filing of DRHP (draft red herring prospectus),' Pandey said.
The regulator said the new rule would facilitate founders who received such benefits at least one year prior to the filing of DRHP with Sebi, to continue to hold such benefits.
It also eased norms for foreign funds investing in government securities. This comes at a time when several global index providers have included local sovereign debt in their respective bond indices, such as JP Morgan Global EM Bond Index, Bloomberg EM Local Currency Government Index and FTSE Russell Emerging Markets Government Bond Index.
Sebi has harmonised KYC (know your client) requirements with the central bank norms.
Meanwhile, Sebi also clarified that no new Esops could be issued to promoters after the company is listed. The regulator has also approved tweaking of rules on offer for sale.
It said equity shares received upon conversion of fully paid-up compulsorily convertible securities received pursuant to an approved scheme would be exempted from the requirement of a minimum public holding period of one year.
At present, this exemption is allowed only for equity shares acquired pursuant to an approved scheme. 'This will assist the companies contemplating reverse flipping,' the Sebi chief said.
The Sebi board also approved the proposal to allow public sector companies (PSUs) to voluntarily delist from stock exchanges through a separate carve-out mechanism—provided the government holds more than 90% stake. There are five listed PSUs where government holding equals or exceeds 90%.
This new rule would not be applicable to banks, non-banking financial companies and insurance companies.
Currently, delisting is considered successful if the promoter's shareholding, along with shares tendered by public shareholders, reaches 90%.
Under the proposed mechanism, PSUs could go private through a fixed-price delisting process, irrespective of whether their shares are frequently or infrequently traded. However, the fixed delisting price would need to be at least 15% premium over the floor price.
The regulator has also relaxed the requirement of securing approval from two-thirds of public shareholders for delisting proposals.
The Sebi board also approved the proposal to permit AIFs and investors to co-invest in unlisted companies through AIFs.
The new norms will allow both higher fund flows and limit regulations, experts said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India Today
an hour ago
- India Today
Insured, but at what cost?
Remember the old life insurance ad tagline 'Sar utha ke jiyo' (live with your head held high)? It promised dignity and peace of mind, that no matter what life throws at you, your insurance policy had your today, as medical costs soar and risks multiply, insurance is no longer optional. The question is, are people truly getting the protection they're paying for?Hospitals are turning into battlegrounds over pending claims, with policyholders watching their premiums shoot up faster than their salaries. Growing delays in claims, rising premiums, high taxes, and a lack of trust are forcing people to rethink their insurance fact, nearly 50% of policyholders who filed a health insurance claim in the last three years faced major issues, such as rejections, partial approvals, or long discharge delays, according to a LocalCircles survey that covered over 100,000 respondents across 327 by these experiences, some have started trimming their coverage. Others are stepping away from health insurance altogetherPEOPLE ARE PULLING BACK Abhishek Kumar, Sebi-registered investment advisor and founder of SahajMoney, says there has been a clear shift.'Many clients have come back to us asking for advice, especially about health insurance, as premiums are going up exponentially,' he said. 'Despite our advice, many have shown intent to reduce the cover or stop it altogether because of affordability issues.'His observation lines up with broader trends. FY24 data from IRDAI (Insurance Regulatory and Development Authority of India) shows that the total amount of health insurance claim rejections rose to Rs 26,000 crore, up 19% from the previous year. The proportion of health insurance claims denied stood at 11%, with another 6% and healthy individuals are the first to de-prioritise insurance. 'They don't prioritise the immediate need for insurance and believe they can purchase it later,' said TURNING INTO A BATTLEThe LocalCircles report reveals that 60% of patients had to wait 6–48 hours for cashless discharge even though IRDAI has asked hospitals and insurers to settle claims within one hour. Only 8% of people said they got prompt, real-time settlement at the time of adds, 'Many clients have shared experiences of delays in claims processing or, in some cases, outright rejection. The main reasons are errors in paperwork, non-disclosure of pre-existing conditions, missed premium payments, or inadequate medical documentation. This adds to policyholder frustration.'TAXES ADD TO THE BURDENOne often overlooked reason people are quitting insurance is the 18% GST on premiums, especially in health and term life Mani, Partner – Indirect Tax at BDO India, said, 'This GST rate leads to a significant increase in cost. Since the full premium plus tax becomes a sunk cost if the claim isn't triggered, people are questioning the value.'When it comes to health insurance for senior citizens, the pain is worse. Premiums are already higher, and the added 18% GST makes them even more end up paying almost 20% of their premium as GST, which they could have used to increase their cover or spend elsewhere,' said Kumar. 'In the absence of a strong public healthcare system, GST on insurance becomes a big deterrent, especially for the middle class.'SHOULD BASIC POLICIES BE TAX-FREE?There's a growing demand to exempt health and term insurance from GST, at least for essential or low-value coverage.'Several developed countries like Canada and those in the EU have exempted insurance from GST or VAT. We have neither that relief, nor a strong public system, so we are caught between a rock and a hard place,' Kumar however, suggests a middle ground. 'Full GST exemption would remove insurers' ability to claim input tax credit, and they may hike premiums to compensate. A better option is to lower the GST rate, say to 5%, so that the benefit is passed directly to policyholders.'IRDAI's grievance data shows that two-thirds of all complaints in the non-life segment relate to claims, mostly due to delays, denials, or settlement disputes. Over 200,000 complaints were logged through IRDAI's Integrated Grievance Management System (IGMS) in FY23 the life insurance segment, 15,088 claims were outright rejected in FY22, amounting to over 1,026 crore. Many were rejected due to simple documentation issues, such as outdated nominee details or address data paints a clear picture. People are unhappy with rising costs and they're losing faith in the insurance process. Whether it's a denied hospital claim or tax-loaded premiums, consumers are asking: is insurance still worth it?'We always advise clients to maintain an emergency fund. Because when claims don't come through, your only real safety net is your own savings," said premiums become affordable, claim settlements more transparent, and tax policy more realistic, India's insurance sector may continue to see people stepping back from a product designed to protect them.(This is Part 1 of our in-depth series on the unravelling of India's insurance safety net, exploring how rising premiums, mounting tax burdens, and frequent claim disputes are pushing people away from the very protection they once relied on. Part 2 will spotlight real stories of policyholders caught in the web of delayed or rejected claims. Stay tuned.)
Time of India
2 hours ago
- Time of India
Sebi eases regulations for startup founders and public sector cos to boost capital market
The Securities and Exchange Board of India (SEBI) has approved new rules. Startup founders can now hold employee stock options after listing. Alternative investment funds get co-investment opportunities. Public sector companies can voluntarily delist with relaxed norms. Foreign funds will benefit from eased investment rules. These changes aim to boost investment and simplify regulations for businesses in India. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: The board of India's capital markets regulator on Wednesday cleared a draft of measures to enable ease of doing business, including allowing startup founders to continue holding employee stock options (Esops) even after listing, extending co-investment opportunities to alternative investment funds , and permitting voluntary delisting of public sector rules require founders to be classified as promoters at the time of filing of initial public offering (IPO) documents. However, once listed as promoters, they are ineligible to hold or be granted share-based benefits. If they hold Esops at the time of filing of offer documents, they are required to liquidate such benefits before the IPO."This provision has been found to be impacting founders," Sebi chairman Tuhin Kanta Pandey are "classified as promoters at time of filing of DRHP (draft red herring prospectus)," Pandey regulator said the new rule would facilitate founders who received such benefits at least one year prior to the filing of DRHP with Sebi, to continue to hold such also eased norms for foreign funds investing in government securities. This comes at a time when several global index providers have included local sovereign debt in their respective bond indices, such as JP Morgan Global EM Bond Index, Bloomberg EM Local Currency Government Index and FTSE Russell Emerging Markets Government Bond has harmonised KYC (know your client) requirements with the central bank Sebi also clarified that no new Esops could be issued to promoters after the company is listed. The regulator has also approved tweaking of rules on offer for said equity shares received upon conversion of fully paid-up compulsorily convertible securities received pursuant to an approved scheme would be exempted from the requirement of a minimum public holding period of one present, this exemption is allowed only for equity shares acquired pursuant to an approved scheme. "This will assist the companies contemplating reverse flipping," the Sebi chief Sebi board also approved the proposal to allow public sector companies (PSUs) to voluntarily delist from stock exchanges through a separate carve-out mechanism-provided the government holds more than 90% stake. There are five listed PSUs where government holding equals or exceeds 90%.This new rule would not be applicable to banks, non-banking financial companies and insurance delisting is considered successful if the promoter's shareholding, along with shares tendered by public shareholders, reaches 90%.Under the proposed mechanism, PSUs could go private through a fixed-price delisting process, irrespective of whether their shares are frequently or infrequently traded. However, the fixed delisting price would need to be at least 15% premium over the floor regulator has also relaxed the requirement of securing approval from two-thirds of public shareholders for delisting Sebi board also approved the proposal to permit AIFs and investors to co-invest in unlisted companies through AIFs."Sebi's approval of a dedicated co-investment vehicle (CIV) framework under the AIF regulations is a breakthrough reform. It streamlines how accredited investors - already participants in AIFs - can co-invest in high-conviction opportunities alongside fund managers, aligns India with global norms, and removes longstanding friction around such structures," said Gopal Srinivasan, chairman and managing director, TVS Capital new norms will allow both higher fund flows and limit regulations, experts said."This will further increase the flow of private--especially domestic capital--to entrepreneurial and growth businesses. By limiting CIVs to accredited investors, Sebi has also signaled a shift toward more principle-based, lighter-touch regulation for qualified participants," Srinivasan said. "Alongside the clarity on ESOPs for startup founders, this marks Sebi's strong commitment to innovation, deeper capital access, and sustained alignment among investors, founders, and fund managers," Srinivasan regulator said a separate co-investment scheme would have to be launched for each co-investment in an investee company.
Time of India
4 hours ago
- Time of India
HDFC Bank's chief HR officer Razdan quits after 7 years
MUMBAI: HDFC Bank informed stock exchanges that its chief human resource officer Vinay Razdan has resigned, effective June 18. However, the bank did not disclose any reason, which is mandated by Sebi norms. Razdan joined the bank in 2018 and was CHRO at Idea earlier. In his June 2 resignation letter, Razdan said that he was serving 3 months notice and will proceed on 'gardening leave' during notice period unless communicated otherwise by the bank. Gardening leave refers to an absence where an employee is needed not to report to the workplace during notice period. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
