Sebi grants one-time relaxation to companies planning public issues

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday provided a one-time relaxation to companies planning public issues, extending the validity of its observation letters in a bid to ease fundraising pressures in a volatile market.

“Sebi has received representation from the industry body on difficulties faced by the issuers in mobilising resources and accessing the capital market in the backdrop of ongoing geopolitical tensions in West Asia. This has led to several issuers to defer, recalibrate or withdraw issuance plans leading to potential lapses in observation letter validity and duplication of regulatory processes,” Sebi said in a circular.

The regulator said observation letters expiring between April 1, 2026, and September 30, 2026, will now remain valid until September 30, 2026. The relief is conditional upon the lead manager submitting an undertaking confirming compliance with updated disclosure requirements when filing revised offer documents.

“This is a pragmatic move by Sebi acknowledging the impact of global macroeconomic conditions on IPO market activity,” said Dharmesh Mehta, MD & CEO, DAM Capital Advisors.

Out of 141 valid approvals that were to collectively raise about ₹1.73 lakh crore through IPOs, regulatory nods for 15 mainboard companies were about to expire in 1-3 months with issuance worth ₹26,000 crore, according to data from Prime Database.

Under existing norms, Sebi’s observation letters – a key clearance for launching public issues – are valid for 12 months, or up to 18 months in certain cases. The regulator said the new rule takes immediate effect.