The issuance and listing of securities in India are primarily governed by the Companies Act, 2013, as amended (“Companies Act”). The Securities and Exchange Board of India (“SEBI”), constituted under the Securities and Exchange Board of India Act, 1992, as amended (“SEBI Act”), is the statutory regulator for the securities markets, vested with quasi-legislative, quasi-judicial, and quasi-executive powers.

The issuance and listing of securities is also governed by the Securities Contracts (Regulation) Act, 1956, as amended, (“SCRA”), which, read with the Securities Contracts (Regulation) Rules, 1957, as amended, (“SCRR”), governs the recognition of stock exchanges, continuous listing and the minimum public shareholding requirement. Rule 19(2)(b) and Rule 19A of the SCRR prescribe the minimum offer to public and the 25% minimum public shareholding threshold respectively.

For equity offerings, the filing of offer documents and disclosure requirements are primarily governed by the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (“SEBI ICDR Regulations”), supplemented by a consolidated Master Circular, as amended (“SEBI ICDR Master Circular”).

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI LODR Regulations”) govern continuous disclosure and corporate governance obligations for all listed entities, supplemented by a consolidated Master Circular incorporating applicable circulars up to January 30, 2026.

The two main stock exchanges, BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”; and together with the BSE, the “Stock Exchanges”), are effectively gatekeepers with the power to first examine all filings and compliance by listed and to be listed companies as delegated by SEBI. These also include member supervision and enforcement of trading and listing rules, and the Stock Exchanges possess their own approval processes for listing.

Additional authorities include: (I) the Ministry of Finance and the Department of Economic Affairs (policy oversight); and (ii) the Reserve Bank of India (“RBI”), which regulates foreign investment inflows and supervises the money and government securities markets, amongst others.

For debt issuances, the primary framework is the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, as amended (“SEBI NCS Regulations”). SEBI has issued an updated Master Circular for Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities, and Commercial Paper having reference number SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137 dated October 15, 2025, as amended (“SEBI NCS Master Circular”).

The RBI is the regulator and issuer of government securities and treasury bills; its monetary policy directly impacts bond yields and corporate debt pricing.

The SEBI (Debenture Trustees) Regulations, 1993, as amended (“SEBI DT Regulations”) govern the appointment and obligations of debenture trustees, who act as fiduciaries for debt security holders. Privately placed corporate debt is further subject to Sections 71 and 42 of the Companies Act and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended; and where issued on the electronic book provider (“EBP”) platform, must comply with the EBP mechanism prescribed under the SEBI NCS Master Circular for issuances at or above the applicable threshold of ₹100 crores. Further, a maximum number of fourteen ISINs maturing in any financial year is allowed for an issuer of debt securities.

Stock Exchanges, depositories and clearing corporations function as quasi regulators under the Market Infrastructure Institutions (“MIIs”) framework, with powers delegated by SEBI. Stock exchanges and clearing corporations in India are governed under the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, as amended (“SECC Regulations”). Delegated functions of the Stock Exchanges  include inspections, supervising trading members, and enforcing membership rules and listing conditions. They operate their own disciplinary panels and market surveillance.

Depositories are governed by the Depositories Act, 1996, as amended and the SEBI (Depositories and Participants) Regulations, 2018, as amended. The registered depositories are the National Securities Depository Limited and the Central Depository Services Limited, entrusted with electronic custody of securities, settlement, corporate actions management, pledging and regulatory compliance.

Clearing corporations, governed by the SECC Regulations, collect, allocate and monitor margins, neutralise potential defaults, and determine fund and securities obligations for every trade. It should be noted that MIIs are delegated, statutorily supervised front-line regulators rather than voluntary self-regulatory organisations; they operate under continuous SEBI oversight, and their bye-laws and disciplinary actions are subject to SEBI supervision and appeal before the Securities Appellate Tribunal in India.

Any offer of securities to the public generally requires a prospectus under the Companies Act. The principal exemptions are:

• Private Placement: Under Section 42 of the Companies Act, a company, private of public (listed or unlisted), may offer securities to a select group not exceeding 200 persons (excluding qualified institutional buyers and employees) in the aggregate in a financial year per class of security, without a prospectus, subject to the issuance of a private placement offer-cum-application letter (Form PAS-4), undertaking a special resolution, and the prescribed conditions. It is to be noted, that explanation III to section 42(3) of the Companies Act provides that if a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to more than the prescribed number of persons, whether the payment for the securities has been received or not or whether the company intends to list its securities or not on any recognised stock exchange in or outside India, the same shall be deemed to be an offer to the public; and thereby the requirement of filing of a prospectus shall have to be complied.
• Preferential Allotment: It is a private placement by listed companies to identified investors on a negotiated basis subject to a stock exchange linked floor price. Since a preferential allotment by listed Indian companies is a private placement under Companies Act, issuance of a prospectus and public issue requirements are exempted in relation to such offerings. A preferential issue shall be, subject to pricing requirements, lock-in and prior shareholder approval by special resolution under section 62 of the Companies Act. Additionally, a preferential issue must comply with Chapter V of the SEBI ICDR Regulations, including the pricing formula, minimum lock-in and eligibility conditions.
• Qualified Institutions Placement (QIP): A listed issuer may also raise capital under the private placement route from qualified institutional buyers under Chapter VI of the SEBI ICDR Regulations; without a prospectus, and subject to the eligibility, floor-price and minimum-allottee conditions prescribed thereunder and a prior shareholder approval by special resolution under section 62 of the Companies Act shall be required. The issuance is made on the back of a placement document, which should contain all information for eligible qualified institutional buyers to make a well-informed investment decision in relation to the placement of securities.
• Rights Issue: An offer to existing shareholders in the proportion to their current holding. The ratifying authority for a rights issue is the board of directors of the issuer and the securities are freely priced under this route.

Insider trading is governed by the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended (“SEBI Insider Trading Regulations”), which apply to all trading by insiders on the basis of Unpublished Price Sensitive Information (“UPSI”). A deeming fiction treats a person with continual access to UPSI as a “connected person” unless the contrary is proved, and a person is an insider regardless of how UPSI was obtained.

A listed company must formulate and implement the following:

• Policy for the sharing of UPSI in the ordinary course of business for legitimate purposes.
• Whistle Blower Policy enabling employees to report leaks of UPSI.
• Code of Fair Disclosure and Code of Conduct: A code of practices for fair disclosure and conduct must be promulgated under the SEBI Insider Trading Regulations with certain minimum requirements prescribed thereunder to regulate, monitor and report trading by designated persons, including trading-window closures and pre-clearance of trades by connected persons and above prescribed thresholds.
• Structured Digital Database (SDD): Maintenance of a structured digital database under Regulation 3(5) recording the nature of UPSI and the persons with whom it is shared, with non-tamperable time-stamping, audit trails and prescribed retention.

It should be relevant to note that information of a price sensitive nature can be shared in connection with an acquisition under the SEBI Insider Trading Regulations. However, for transactions that do not trigger the open offer requirements under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (“SEBI Takeover Regulations”) a public disclosure of the UPSI so shared has to be made at least 2 trading days prior to the closing of the proposed acquisition.

Prospectus liability arises primarily under the Companies Act; SEBI’s enforcement powers operate in parallel under the SEBI Act.

Criminal Liability — Sections 34 and 447 of the Companies Act: Any person who authorises the issue of a prospectus containing an untrue or misleading statement, or a misleading omission, is liable for fraud under Section 447, punishable with imprisonment of six months to ten years and a fine of not less than the amount involved and may extend to up to three times that amount (for fraud of at least ₹10 lakh or 1% of turnover, whichever is lower); a minimum of three years where public interest is involved; and, for smaller frauds not involving public interest, imprisonment up to five years or fine up to ₹50 lakh, or both.

Civil Liability: Under Section 35, directors at the time of issue, promoters, named experts and persons who authorised the issue are liable to compensate subscribers who sustained loss, subject to a due diligence defence. A class action suit may be instituted in relation to civil liability.

Contravention of Required Contents: Under Section 26, where a prospectus omits required contents, the company and any person knowingly a party face a fine of ₹50,000 to ₹3 lakh.

SEBI enforcement powers: Independently of the Companies Act, SEBI may, under Sections 11, 11B and 11D of the SEBI Act, pass directions, order disgorgement, restrain persons from accessing the securities market and impose monetary penalties under Chapter VIA (Sections 15A to 15HB, including penalties for misstatements in offer documents and for fraudulent and unfair trade practices). SEBI orders are appealable to the Securities Appellate Tribunal and thereafter to the Supreme Court on a question of law. SEBI also has powers under section 24 of the SEBI Act to initiate criminal prosecution for violation of provisions of the SEBI Act and the rules and regulations made thereunder. Each of these powers can be exercised independent of each other and concurrently.

The key remedies include:

• Oppression and Mismanagement: Under Sections 241 and 242, read with Section 244 of the Companies Act, eligible shareholders may approach the National Company Law Tribunal (“NCLT”) for relief where the company’s affairs are conducted oppressively or prejudicially to the minority shareholders.
• Class Action Suit: Under Section 245 of the Companies Act, the prescribed minimum number of members may bring a class action before the NCLT for unlawful, wrongful or fraudulent acts causing loss.
• SCORES: The SEBI Complaints Redress System, an online platform for investor grievances against listed companies and intermediaries.
• Online Dispute Resolution (ODR): SEBI’s SMART ODR portal provides a time-bound conciliation and online arbitration mechanism for grievances that remain unresolved through SCORES.

The investor protection rights of debt securities’ holders stem from the SEBI DT Regulations and SEBI NCS Regulations. Listed non-convertible debentures require a SEBI-registered debenture trustee, who acts as fiduciary and may enforce security and take protective action on defaults by the issuers of debt securities. Key remedies include enforcement through debenture trustees (convening meetings, taking possession of and selling secured assets); initiation of corporate insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016 (“IBC”) on payment defaults; SCORES grievances; and remedies before civil courts, the NCLT and debt recovery tribunals (for debt by banks and financial institutions).

In addition, the SEBI NCS Master Circular provides for electronic consent of debenture holders and a debenture-holder-driven decision on enforcement of security through the debenture trustee, together with the Recovery Expense Fund maintained with the Stock Exchange to meet enforcement costs.

The outlook for 2026 is robust yet valuation-disciplined, transitioning from caution towards high-intensity activity. In FY 2025-26 India recorded strong equity capital markets activity, and equity fundraising is expected to remain strong, anchored by a deep pipeline of marquee listings and mature unicorns, supported by India’s standing as one of the world’s largest IPO markets, driven by technology listings and sponsor-backed exits.

Debt capital markets are projected to sustain elevated activity, increasingly favoured over bank credit for balance-sheet optimisation and tenor diversification. This shift is underpinned by a series of SEBI interventions. Chief among them is the “large corporate” framework under Regulation 50B of the SEBI NCS Regulations, read with Chapter XII of the SEBI NCS Master Circular providing that a large corporate must raise not less than 25% of its qualified borrowings through the issuance of debt securities, assessed on a cumulative basis over a contiguous block of three financial years. The requirement is now backed by a graded incentive/disincentive mechanism — a reduced contribution to the core Settlement Guarantee Fund (SGF) of the Limited Purpose Clearing Corporation, together with lower annual listing fees, for entities that comply, and an additional SGF contribution for those that fall short — in place of the erstwhile monetary penalty of 0.2% of the shortfall. Alongside this, SEBI has reduced the face value of privately placed debt securities to ₹10,000, subject to prescribed conditions, to broaden the investor base. These reforms stand consolidated in the Master Circular for issue and listing of Non-Convertible Securities dated October 15, 2025.

Listing on the Stock Exchanges is governed by the SEBI ICDR Regulations and SEBI LODR Regulations. Illustrative eligibility requirements include:

• Net tangible assets of at least ₹30 million, restated and consolidated, in each of the three preceding full financial years, of which not more than 50% are held in monetary assets (the monetary-asset limit not applying where the offer is entirely an offer for sale) as per Regulation 6(1)(a) of the SEBI ICDR Regulations.
• Average operating profit of at least ₹150 million, restated and consolidated, during the preceding three years (of twelve months each), with operating profit in each of these three years, in terms of Regulation 6(1)(b) of the SEBI ICDR Regulations.
• Net worth of at least ₹10 million, restated and consolidated, in each of the three preceding full financial years as per Regulation 6(1)(c) of the SEBI ICDR Regulations.
• Minimum post-issue paid-up capital and issue size, absence of insolvency/winding-up proceedings, no wilful defaulter or fugitive economic offender status, no restrictive articles, no debt-servicing defaults, and compliance with the offer-for-sale conditions under Regulation 8 and the eligibility conditions under Regulations 5 to 7 of the SEBI ICDR Regulations.

Where an issuer does not satisfy the net tangible assets, operating profit and net worth criteria under Regulation 6(1) of the SEBI ICDR Regulations, as mentioned above, it may proceed under Regulation 6(2) of the SEBI ICDR Regulations: (i) the issue is made through the book-building route, and (ii) at least 75% of the net offer is allotted to qualified institutional buyers (“QIBs”).

Timelines and Costs: A typical main-board IPO, from filing the DRHP to listing, takes approximately 4 to 6 months; the issuer may open the IPO within 12 months of SEBI observations. Post-closure, listing and trading typically commences within T+3 working days from issue closure, following SEBI’s reduction of the listing timeline from T+6 to T+3. Estimated costs typically range from 4% to 12% of issue proceeds. SEBI also offers a confidential pre-filing route for the DRHP, permitting the issuer to interact with SEBI before public disclosure of the draft offer document.

SEBI permits superior voting rights (“SR”) shares for listed companies in a limited manner for eligible companies under the framework prescribed in the SEBI ICDR Regulations read with Regulation 41A of the SEBI LODR Regulations. Such SR shares are to be held by promoters/founders, be subject to sunset and coat-tail provisions, and carry voting rights no higher than the prescribed ratio.

Separately, under Regulation 31B of the SEBI LODR Regulations, special rights (such as board-nomination, affirmative-vote or information rights) granted to any shareholder of a listed entity must be approved by a special resolution once every five years from the date of grant; subsisting special rights were to be approved within the prescribed period. This does not apply to special rights granted to RBI-regulated financial institutions under lending arrangements or to SEBI-registered debenture trustees under debenture subscription agreements.

Minority protections span the Companies Act and SEBI LODR Regulations: special resolutions (75% of votes cast) for fundamental corporate actions; mandatory postal ballot and e-voting on specified matters; NCLT jurisdiction over oppression and mismanagement under Sections 241–246 of the Companies Act; and class action suits under Section 245 of the Companies Act.

• Oppression and Mismanagement: Under Sections 241 and 242, read with Section 244 of the Companies Act, eligible shareholders may approach the National Company Law Tribunal (“NCLT”) for relief where the company’s affairs are conducted oppressively or prejudicially to the minority shareholders.
• Class Action Suit: Under Section 245 of the Companies Act, the prescribed minimum number of members may bring a class action before the NCLT for unlawful, wrongful or fraudulent acts causing loss.

The SEBI Takeover Regulations govern the takeover and change of control of listed companies in India. Under the Indian SEBI Takeover Regulations, any acquisition of shares beyond identified thresholds and/or control by an acquirer (along with persons acting in concert) results in triggering a mandatory tender offer in India for a minimum of 26% of the shareholding of the target company in India. In the event the acquirer (along with persons acting in concert) acquires 25% of the fully diluted shareholding of the target company; or being above 25%, acquires 5% of the shareholding in a financial year, the mandatory tender offer requirements mentioned above are triggered. Additionally, if the control of the target changes on account of shareholding change or by way of shareholders’ agreements, again the mandatory tender offer requirements are triggered as mentioned above. Please note that the term “control” is defined under the Indian securities laws to mean – the power to control the majority of the board of directors and/or the right to determine the management and affairs of the target company.

Squeeze-out provisions: Section 236 of the Companies Act permits compulsory acquisition once the acquirer and persons acting in concert hold 90% or more of the issued equity share capital (whether by amalgamation, share exchange, conversion or otherwise), enabling the majority to notify the minority of its intention to buy out the remaining shares at a price determined by a registered valuer. Further, delisting offers in India may also have the effect of squeezing out minorities as the promoter holding is required to go above 90% (consequent to a delisting offer) for the delisting to succeed.

Other than fund raising transactions for which offer documents with disclosure requirement are prescribed, listed entities must also promptly disclose material events as required under the SBI LODR Regulations. Categories triggering disclosure and, in certain cases, scrutiny include: acquisitions, schemes of arrangement and restructuring; issuance, forfeiture and alteration of securities; new or revised credit ratings; outcomes of board meetings on Schedule III matters; binding agreements not in the ordinary course of business (shareholders’, joint venture and family settlement agreements affecting management or control); agreements impacting management, control or liabilities of the listed entity (whether or not it is a party); fraud, defaults and arrests involving the listed entity and key personnel; open offers under the SEBI Takeover Regulations; and buybacks under the SEBI (Buy-Back of Securities) Regulations, 2018.

Schemes of arrangement involving listed entities additionally require the prior no-objection of the Stock Exchanges and SEBI under Regulation 37 of the SEBI LODR Regulations before filing with the NCLT, and combinations meeting the prescribed asset/turnover thresholds require prior approval of the Competition Commission of India under the Competition Act, 2002.

The RPT framework operates under Section 188 of the Companies Act and the SEBI LODR Regulations. Under the SEBI LODR Regulations, a ‘related party’ includes any person or entity in the promoter or promoter group, any person or entity holding, directly or on a beneficial-interest basis under Section 89 of the Companies Act, 10% or more of the equity shareholding (the threshold having reduced from 20% with effect from April 1, 2023), directors, key managerial personnel and their relatives. Section 2(76) of the Companies Act is separate and includes entities in which directors or relatives have the specified interest.

Regulation 23(1) now cross-refers to Schedule XII, a graded, turnover-linked materiality framework based on consolidated turnover of the immediately preceding financial year: up to ₹20,000 crore — 10%; above ₹20,000 crore and up to ₹40,000 crore — ₹2,000 crore plus 5% of the excess over ₹20,000 crore; above ₹40,000 crore — ₹3,000 crore plus 2.5% of the excess over ₹40,000 crore, capped at ₹5,000 crore.

RPTs require prior audit committee approval; material RPTs additionally require prior shareholder approval by ordinary resolution, with related parties abstaining from voting. Audit committee approval is also required for certain RPTs to which the listed entity is not a party but a subsidiary is, in the manner set out in Regulation 23.

The governing laws are the SEBI Takeover, ICDR, LODR and Insider Trading Regulations. On acquisitions and disposals, the SEBI Takeover Regulations require event-based disclosures: an initial disclosure on crossing 5% of the shares or voting rights (Regulation 29(1)), and disclosure of any subsequent change of 2% or more by a person holding 5% or more (Regulation 29(2)), within the prescribed timelines. Substantial shareholders in possession of UPSI are also subject to trading-window closures and pre-clearance protocols.

A “controlling shareholder” (“Promoter”) bears a higher burden: stricter pledge/encumbrance disclosure (where total promoter pledge exceeds 50% of their holding or 20% of total share capital, detailed reasons must be disclosed under Regulation 31 of the SEBI Takeover Regulations, with an annual encumbrance declaration); maintenance of minimum public shareholding of at least 25%; minimum promoter contribution of 20% of post-issue capital, locked in for 18 months (or three years where the object is capital expenditure for expansion); periodic disclosures under Regulation 31 of the SEBI LODR Regulations and the Takeover and Insider Trading Regulations; and, where applicable, a non-compete arrangement with the listed entity.

On the initial disclosure threshold, the event-based disclosure under Regulation 29(1) is triggered at 5% of the shares or voting rights (not at the 25% open-offer trigger); the open-offer thresholds under Regulations 3 and 4 are distinct and separately imposed. Further, post an initial public offer, the minimum promoter’s contribution and residual promoter holdings are locked in for the periods prescribed under the SEBI ICDR Regulations, which SEBI has been progressively rationalising.

Shareholder approvals are of two kinds: special resolutions (not less than three-fourths of votes cast of members present and voting) and ordinary resolutions (simple majority of members present and voting). Matters typically requiring a special resolution include: issuance of shares by way of a public issue or private placement; amending the articles; issuing sweat equity shares; shifting the registered office outside local limits; reduction of share capital; removing a statutory auditor before expiry of tenure; authorising a buyback; appointing more than 15 directors; and inter-corporate loans and investments exceeding statutory limits.

Under the Companies Act, other matters may be passed by ordinary resolution, subject to the articles of association of the company.

For listed public companies, at least one-third of the board must be independent; where there is no regular non-executive chairperson, or where the regular non-executive chairperson is a promoter or related to a promoter or to a board member of such company (or to a management person one level below the board), at least half of the board must be independent. Under Regulation 17(1)(a) of the SEBI LODR Regulations, the top 1,000 listed entities by market capitalisation must have at least one woman independent director.

For unlisted public companies, under Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, at least two independent directors are required if paid-up capital of a company is ₹10 crore or more, turnover is ₹100 crore or more, or aggregate outstanding loans, debentures and deposits exceed ₹50 crore.

Independence is a defined status: an independent director must be a person of integrity and relevant expertise, not a promoter or related to promoters or directors, with no pecuniary relationship (beyond permitted remuneration) with the company or its holding, subsidiary or associate during the specified look-back period, and must register with, and clear the online proficiency self-assessment test administered by the Indian Institute of Corporate Affairs (unless specifically exempted). Appointment and removal of an independent director of a listed entity requires a special resolution.

Restated financial statements as at and for the three most recent financial years, with any applicable stub period, must be presented in the DRHP under the SEBI ICDR Regulations, prepared under the Indian Accounting Standards (“Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015. The restatement has to be carried out on the audited financial statements of the issuer company and is accompanied by a restatement examination report. Where the issuer has subsidiaries, consolidated restated financials are required. Financials originally under Indian GAAP must be restated into Ind AS per the applicable ICAI Guidance Note.

Where there is a material acquisition or divestment, pro forma financial statements are required; pursuant to the March 8, 2025 amendment, an issuer may voluntarily prepare pro forma financials even below the materiality threshold, useful for risk mitigation and to give investors a meaningful view of the post-acquisition profile.

If the latest full financial year in the offer document is older than six months from the date of DRHP filing, a stub period must be presented; accordingly, financials are deemed stale if the DRHP is filed more than six months after the last audited balance sheet. The restated financial information must be examined and reported upon by the statutory auditor (or a peer-reviewed chartered accountant) in accordance with the Guidance Note on Reports in Company Prospectuses.

India’s ESG landscape has evolved into a regulated framework. Section 166 of the Companies Act requires directors to act in the best interests of the company, its employees, shareholders, the community and the environment, and Section 135 mandates CSR spending by specified companies. In the capital markets, ESG is operationalised through the SEBI LODR Regulations, under which the top 1,000 listed entities by market capitalisation must file a Business Responsibility and Sustainability Report (“BRSR”) as part of the annual report, with others permitted to report voluntarily.

Recent developments include ESG-enabling instruments under the SEBI NCS Regulations (green, social and sustainability-linked bonds), operationalisation of the Social Stock Exchange, and the Carbon Credit Trading Scheme. Significantly, SEBI has introduced BRSR Core — a subset of KPIs subject to third-party assurance or assessment (the earlier mandatory ‘reasonable assurance’ standard having been relaxed to permit assessment or assurance) — extended value-chain ESG disclosures for the largest listed entities on a phased, initially voluntary/comply-or-explain glide path (the timelines for which SEBI has deferred and eased), and introduced a regulatory framework for ESG Rating Providers together with disclosure norms for ESG mutual fund schemes.

Under Indian securities laws, a bond trustee (or debenture trustee) is mandatorily appointed in relation to the issuance of listed debentures and the debenture trust deed executed in relation to the issuance constitutes the debentures. The trustee’s duties include ensuring the offer document is consistent with the terms of issue and the trust deed; obtaining periodic status/performance reports; promptly communicating defaults to holders; appointing a nominee director in prescribed circumstances (such as two consecutive interest defaults, failure to create security, or redemption default); and convening meetings of holders. Any clause limiting or extinguishing the trustee’s obligations, or conflicting with the SEBI DT Regulations, is null and void.

The trustee must also, before the issue opens, carry out independent due diligence on and create/perfect the security (including issuing a due diligence certificate), and, post-issue, monitor the asset cover and covenants through the depository-hosted Security and Covenant Monitoring System, and maintain the Recovery Expense Fund arrangement.

Credit enhancement is used to achieve a higher instrument rating, broaden the investor base and reduce borrowing cost. The SEBI Master Circular for Credit Rating Agencies identifies qualifying structures including guaranteed and shortfall-undertaking-backed bonds; covered bonds; partially guaranteed bonds; commercial mortgage-backed securities (CMBS)-like structures; standby letter of credit (SBLC) backed securities; debt backed by pledge of shares or other assets; guaranteed pooled bond issuances; obligor/co-obligor and cross-default guarantee structures; debt backed by a payment waterfall/escrow/debt service reserve account (DSRA) with full guarantee or DSRA replenishment guarantee; and letters of comfort.

Restrictive covenants form part of the debenture trust deed and the offer document (General Information Document and Key Information Document) and are disclosed under the SEBI NCS Regulations. The Master Circular for Debenture Trustees and the Security and Covenant Monitoring System require trustees to independently monitor compliance. Typical covenants include: security-cover maintenance (asset coverage ratio, commonly 100% or higher, breach of which is an event of default); negative pledge; change of control restrictions; financial covenants (debt-equity, interest coverage, net worth); detailed events of default and acceleration; use-of-proceeds restrictions (particularly for green, social and sustainability-linked instruments); and restrictions on structural changes (mergers, disposals, changes in line of business, dividends during specified periods).

The covenants are aimed at preserving the issuer’s financial condition and the sufficiency of security, preventing dilution of the security interest, and providing the trustee with early warnings of deterioration. The clear trend is towards standardisation and system-based, near-real-time monitoring: SEBI has moved covenant surveillance onto the depository-hosted monitoring system, mandated electronic voting of debenture holders on material breaches and consents, and is progressively standardising covenant disclosure in the offer document, which is expected to reduce bespoke negotiated covenants in favour of a more uniform and monitorable set.

Tax on interest is governed principally by the Income-tax Act, 2025 and the rules thereunder. The investor/ holder is liable to pay income-tax on the interest income. The issuer deducts tax at source or withholding tax at the prescribed rates for both resident and non-resident holders. In the context of non-resident holders (including FPIs), some concessional withholding tax rates are provided for interest payable by an Indian company or a business trust in respect of moneys borrowed from a source outside India by way of issue of any long-term bonds or rupee denominated bonds, which are listed only on a recognised stock exchange located in an IFSC (4% where such bonds are issued on or after the 1st April, 2020 but before the 1st July, 2023, and 9% where such bonds are issued on or after the 1st July, 2023). Otherwise, the general non-resident withholding rate applies (plus surcharge and cess), subject to reduction under an applicable Double Taxation Avoidance Agreement.

In practice, terms for FPI investors may contain gross-up clauses under which the issuer bears the withholding tax so the investor receives the coupon net of tax; whether assumed is a matter of negotiation and is disclosed in the offer document. The ultimate liability is that of the investor, and capital gains on transfer may be taxable depending on holding period and tax regime. Non-resident investors seeking treaty relief must satisfy substance and beneficial-ownership requirements, furnish a tax residency certificate, no PE declaration and Form 41, and, where applicable, address the General Anti-Avoidance Rules and the Multilateral Instrument’s principal-purpose test.

Listing of non-convertible securities is governed by the SEBI NCS Regulations, SEBI LODR Regulations and the SEBI NCS Master Circular. Principal requirements include: a mandatory credit rating from at least one SEBI-registered Credit Rating Agency prior to listing (with all ratings, including unaccepted ratings, disclosed); mandatory appointment of a SEBI-registered debenture trustee and execution of a debenture trust deed; issuance and holding in dematerialised form; and in-principle approval from the Stock Exchange(s) with the General Information Document and Key Information Document filed as prescribed.

Continuing obligations under the SEBI LODR Regulations include financial reporting, disclosure of material events, restrictions on modifying debenture terms, and additional interest on default. Issuers with listed debt are also subject to the corporate governance provisions applicable to ‘high value debt listed entities’ (those with outstanding listed non-convertible debt at or above the prescribed threshold) in accordance with the prescribed transition from a comply-or-explain to a mandatory basis, and to the record-date, payment and intimation timelines under the SEBI NCS Master Circular.

The Indian framework does not currently permit a foreign company incorporated outside India to directly conduct a public offering of equity securities on BSE or NSE; the SEBI ICDR Regulations apply to Indian issuers, and there is no direct foreign-company equity-listing route on the main boards akin to the U.S. Form 20-F. Pathways that exist or are under development include: the IFSC / GIFT City route, under which the International Financial Services Centres Authority (“IFSCA”) permits listing of securities (equity, depository receipts and debt) by eligible foreign entities on NSE IFSC and BSE IFSC under a distinct, more liberalised regime; Indian Depository Receipts under Section 390 of the Companies Act and Chapter X of the SEBI ICDR Regulations (limited activity); and listing of foreign-currency debt securities within the GIFT City IFSC framework.

In addition, the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, as amended, read with the Direct Listing Scheme under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, as amended, permit eligible unlisted Indian public companies to directly list their equity shares on permitted international exchanges in the GIFT City IFSC — a reciprocal outbound route — subject to the conditions notified thereunder. The scheme contemplates extension to Indian companies already listed domestically; however, the SEBI operational guidelines for listed Indian companies remain awaited, and until notified the route is available only to unlisted public companies. This remains distinct from any inbound direct listing by a foreign issuer on the domestic main boards, which continues to be unavailable.

Public markets remain a central and viable exit mechanism for private equity and venture capital investors. India has ranked among the largest IPO markets globally in recent years; IPOs represent the principal liquidity event through which investors partially exit via the Offer for Sale (“OFS”) mechanism at listing, supplemented by post-listing block and bulk deals. There are structural limits on the quantum a controlling PE investor may exit via OFS at IPO, and lock-in obligations on pre-IPO shareholders (which SEBI has been rationalising) constrain full exits at listing.

Accordingly, the standard PE exit is typically a two-stage or multi-stage process: a partial OFS exit at IPO, followed by post-listing block sales as lock-in periods expire. SEBI has also proposed easing minimum public shareholding and minimum issue size norms for very large companies to facilitate mega-IPOs and widen the exit window. The entire pre-issue capital held by non-promoters is locked in for six months from allotment in the IPO; this lock-in does not apply to equity shares held by SEBI-registered Category I and II Alternative Investment Funds, venture capital funds and foreign venture capital investors, provided such shares have been held for at least six months from the date of purchase — a carve-out which materially affects the achievable OFS quantum and the sequencing of a sponsor exit.

India’s securities market has recently witnessed a series of reforms aimed at enhancing investor protection, improving market efficiency, and providing greater flexibility to listed and to be listed entities. Key initiatives include:

• Change of rights issue framework: Pursuant to the March 4, 2025, amendment to the SEBI ICDR Regulations, SEBI has streamlined the rights issue process by eliminating the mandatory appointment of merchant bankers, removing SEBI’s prior review of draft letter of offer, simplifying disclosure requirements, and introducing a uniform framework for all rights issues. The reforms also permit promoters to renounce rights entitlements in favour of specific investors and enable completion of rights issues within approximately 23 working days, making rights issues a faster, more efficient and flexible capital-raising mechanism for listed companies.
• Inclusion of stock appreciation rights (“SARs”) under the SEBI ICDR Regulations: Pursuant to the amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, notified on March 4, 2025, SEBI has permitted outstanding Stock Appreciation Rights (“SARs”) granted under a SAR scheme to be exercised into equity shares prior to the filing of the red herring prospectus in a book-built issue or the prospectus in the case of a fixed price issue. Issuers are also required to disclose the details of the SAR scheme and the number of equity shares arising from such exercise in the draft offer document and the offer document. This amendment was introduced as an ease of doing business measure to facilitate IPOs by companies having outstanding SARs and to recognise SARs as an additional form of equity instrument.
• Securities Market Code Bill, 2025: The Union Government of India has introduced the Securities Markets Code Bill, 2025 to consolidate and replace the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, and the Depositories Act, 1996 with a consolidated code. The proposed code seeks to modernise India’s securities law regime by strengthening SEBI’s regulatory powers and eliminating overlapping provisions. It also aims to improve regulatory certainty while preserving flexibility through a principles-based approach to securities market regulation.
• ESOPs to founders: SEBI through its notification dated September 8, 2025, has amended the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 to permit founders who are subsequently identified as promoters in connection with an IPO to continue holding and exercising ESOPs or other share-based benefits, provided such benefits were granted before they were identified as promoters and at least one year prior to the board meeting approving the IPO. The amendment aims to recognise early-stage founder contributions while preventing misuse through last-minute grants before a public offering.

A dedicated regulatory framework for crypto assets remains at an early and fragmented stage, marked by caution and inter-agency deliberation. Entities regulated by the under the RBI were initially restricted from servicing cryptocurrency businesses, but the Supreme Court struck down that restriction. The Government subsequently introduced a fiscal regime for Virtual Digital Assets (“VDAs”), with a flat 30% tax on gains and a 1% tax deducted at source on transactions. SEBI has not issued a formal regulatory regime, and a threshold question remains whether crypto assets fall within the definition of ‘securities’ under the SCRA.

In the absence of formal recognition by SEBI, the regulatory future of crypto assets remains uncertain. VDA exchanges and intermediaries are, however, brought within the Prevention of Money-Laundering Act, 2002 as reporting entities and must register with the Financial Intelligence Unit-India. Further, inter-governmental committees have been set up to examine the legal framework with respect to crypto currency and deliberation is still underway. In the interim, the income-tax framework has formally defined ‘crypto-asset’ with effect from April 1, 2026, and India has committed to implementing the OECD Crypto-Asset Reporting Framework. Ultimately, any capital-markets treatment would depend on whether specific crypto assets are ultimately characterised as securities in India or as a separate asset class.