The Securities and Exchange Board of India (SEBI) is gearing up for a significant revamp of the rules governing listed companies. Chairman Tuhin Kanta Pandey announced that the market regulator expects to release a draft consultation paper on overhauling the Listing Obligations and Disclosure Requirements (LODR) within the next four to six months.
Wide-Ranging Review Based on Industry Feedback
Pandey revealed that internal work on this major regulatory update has already begun. The review, described as wide-ranging, is being shaped by extensive feedback from industry stakeholders. The announcement came after a closed-door interaction with industry representatives organized by the Confederation of Indian Industry (CII).
"Listing regulations constitute a major regulatory framework," Pandey stated. He noted that the recent meeting yielded numerous suggestions, ranging from clarifying existing ambiguities to proposing forward-looking approaches tailored for new-age companies and addressing promoter-related issues. A dedicated LODR Committee will examine all inputs before the consultation paper is issued publicly.
Focus on Strengthening the SME Ecosystem
A central theme of the discussion was the urgent need to integrate more Micro, Small, and Medium Enterprises (MSMEs) into the formal capital market ecosystem. Pandey pointed out that a large number of investment-ready MSMEs remain outside the market. The review is expected to cover challenges specific to companies listed on SME exchanges.
The focus is on creating an enabling environment through improved awareness, preparation for listing, and capacity-building support. CII has proposed a project under its Centre of Excellence for MSMEs to train them on accessing capital markets. Sebi, along with exchanges and depositories, has pledged support for this initiative. Pandey emphasized that several Indian states possess tremendous untapped potential, and enabling their MSMEs will significantly strengthen the SME market.
Echoing this goal, Thomas John Muthoot, Chairman of CII-Southern Region, told the Times of India that the SEBI chairman wants at least 1,000 MSMEs from South India to raise equity in the next three to four years and has urged CII to handhold them in the process.
Simplifying Compliance and Aiding Retail Investors
In response to industry suggestions, SEBI is also looking at simplifying compliance for listed entities. One proposal involves consolidating multiple regulatory filings into a single, unified reporting mechanism, similar to a common portal recently created for stockbrokers.
To empower retail investors, the regulator is proposing a concise, easy-to-read summary of key details in Initial Public Offering (IPO) documents. This move has received widespread support from market participants. Pandey confirmed that a consultation paper on this specific proposal has already been released, and SEBI will proceed after evaluating the feedback.
The upcoming overhaul of the LODR framework marks one of the most substantial potential changes to India's listing norms in recent years, aiming to modernize regulations and foster inclusive growth in the capital markets.
