Insights
Recent SEBI consultation paper a step in the right direction on founder ESOPs
March 21, 2025The Securities and Exchange Board of India has recently issued a consultation paper which inter alia, proposes an amendment to the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 that permits employee stock options granted to founders to remain outstanding post filing of a draft red herring prospectus in respect of a proposed IPO, demonstrating the regulatory intent in promoting a facilitative environment for the listing of new age technology companies.
Our alert conducts a comprehensive analysis of the proposed amendment, including related issues which founders of new age technology companies (NATCs) face in the extant regulatory landscape, and key takeaways on how the proposed amendment will prove beneficial for NATCs/ startups exploring public listing options, and suggestions for rationalization of the proposed amendments and the regime in this regard going forward.
