Sebi tweaks norms to boost investor participation — from IPO summary to easier lock-in rules, all details here

The Securities and Exchange Board of India (Sebi), on Wednesday, 17 December, approved changes to the lock-in period norms for initial public offerings (IPOs), along with a new technology-driven disclosure framework, in an effort to ease compliance and boost investor participation.

“The Board approved the amendment to streamline certain requirements relating to public issues to enhance ease of doing business and increase the engagement and participation of retail investors,” the markets regulator said in a release.

What are the changes in lock-in period norms?

According to the newly implemented changes cleared by Sebi, in case the lock-in of specified securities cannot be created, the depository agencies will keep a record of such securities as ‘non-transferable’ for the duration of the applicable lock-in period.

Sebi's update on the lock-in period norms comes as certain issuers are facing challenges in complying with lock-in requirements in cases where shares are pledged by non-promoters prior to the IPO round.

“The new procedure will ensure compliance with the requirement of lock-in of certain shares even when they are pledged,” Sebi said.

According to the current norm, non-promoter shares and promoters' shares are locked in for a period of six months following the IPO round. It mandates that the entire pre-issue capital held by persons other than the promoters is required to be locked in for a period of six months from the date of allotment in the public issue.

However, this lock-in period norm applies in exception to the shares held by certain specified categories of shareholders, according to Sebi.

“The entire pre-issue capital held by persons other than the promoters, except shares held by certain specified categories of shareholders, is required to be locked-in for a period of six months from the date of allotment in the IPO,” said Sebi.

Mint reported earlier that this system seeks to make the lock-in requirements self-enforcing, even when pledged shares are invoked or released.

Disclosure framework

In an effort to boost retail investor participation in the primary market, the capital market regulator approved a focused, concise and standardised summary of IPO documents in a ‘draft abridged prospectus’ form, which will be available for potential bidders from the Draft Red Herring Prospectus (DRHP) filing stage.

The current provisions mandate that IPO-bound companies have to file all material aspects of the public issue in the DRHP and offer document.

Apart from the draft abridged prospectus at the DRHP stage, the company will also have to file an abridged prospectus at the RHP stage under the new mandate.

Sebi's move follows consultations and the receipt of feedback on its November 2025 paper. The regulator has also deliberated on the amendment with the Primary Markets Advisory Committee.

Sebi Chairman Tuhin Kanta Pandey, at a recent press conference, said the draft abridged prospectus will hold a ‘QR code’ to help investors access key information related to the public issue.