SEBI ICDR Regulations 2025: A Deep Dive into the Latest Amendments
CS Neeraj Jain
Mr Neeraj Jain is the Partner of Expert Global Consultants Private Limited
A SEBI Registered Category -1 Merchant Banker
operating out of New Delhi and providing Pan India Services
Introduction
The Securities and Exchange Board of India (SEBI) has once again demonstrated its proactive stance toward improving capital markets with the recent amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018—commonly referred to as the ICDR Regulations. On March 3, 2025, SEBI notified sweeping changes intended to simplify the capital-raising process, sharpen disclosure obligations, and better align with modern market dynamics.
Aimed at creating a more agile, transparent, and investor-friendly environment, these reforms touch upon various aspects, including rights issues, promoter lock-in, financial disclosures, and IPO eligibility norms. While most provisions came into effect immediately, certain changes related to rights issues took effect from April 4, 2025.
This section examines the major highlights and their implications.
1. Transformation of the Rights Issue Process
a. Wider Applicability of ICDR Regulations
Previously, ICDR norms had applied only to rights issues where the offer size exceeded INR 500 million. This threshold has now been eliminated. All rights issues, irrespective of size, will henceforth be governed by ICDR Regulations. This amendment not only broadens regulatory coverage but also enhances investor protection by ensuring consistent standards across the board.
b. Removal of Lead Manager Obligation
Another notable change is the elimination of the mandatory appointment of a lead manager for rights issues. Previously, merchant bankers were required to oversee the rights issue process, but with this amendment, the issuer, registrar, and stock exchange will now share the responsibility for due diligence and compliance. This streamlining is likely to reduce issuance costs and make capital-raising more accessible for smaller companies.
c. Simplified and Unified Disclosures
In a bid to simplify the preparation of offer documents, SEBI has replaced the earlier tiered disclosure system with a unified format outlined in Part B of Schedule VI. This consistent structure enhances transparency and helps investors better understand the offer documents without having to navigate through varying levels of information based on issue size.
d. Expedited Rights Issue Timeline
Historically, rights issues could take up to 6–7 months to complete, making them cumbersome for companies in urgent need of capital. The 2025 amendments dramatically cut down the timeline to just 23 working days from the date of board approval. This fast-track route enhances the appeal of rights issues as a quick and cost-effective capital-raising mechanism.
2. Introduction of Specific Investors in Rights Issues
One of the most progressive additions is the recognition of ‘Specific Investors’ in the rights issue process. Under the new rules, promoters can renounce their rights entitlement in favor of pre-identified investors, provided their details are transparently disclosed in the offer documents.
Furthermore, issuers are allowed to allot any unsubscribed portion of the issue to these specific investors, thereby increasing the certainty of capital inflow. This reform also introduces a level of flexibility previously unavailable in rights issues, where renunciation was typically open-ended and non-targeted.
3. Revised Lock-in Periods for Promoters’ Contributions
SEBI has recalibrated the lock-in requirements for promoters, linking them directly to the end use of the funds raised:
- If the proceeds are intended for capital expenditure or debt repayment, the lock-in period remains three years.
- If the funds are used for any other purpose, the lock-in is now 18 months.
- In cases where there is excess promoter shareholding, the lock-in has been extended from six months to one year.
This reclassification aims to create stronger alignment between fund usage and promoter accountability, thereby enhancing investor confidence.
4. Strengthened Disclosure Norms
Transparency continues to be a cornerstone of SEBI’s reform strategy. The 2025 ICDR amendments incorporate multiple enhancements to disclosure requirements:
a. Voluntary Proforma Financials
Issuers can now include proforma financial statements even for acquisitions or disposals that fall below materiality thresholds, provided these statements are certified by a peer-reviewed chartered accountant. This is especially relevant in cases of restructuring or inorganic growth where historical financials may not reflect the company’s future profile.
b. Mandatory Reporting of Pre-IPO Transactions
To prevent information asymmetry and protect retail investors, issuers are now required to report all pre-IPO transactions, including placements and secondary sales, to stock exchanges within 24 hours, thereby ensuring that all market participants have access to timely and accurate information.
c. Disclosure of Internal Agreements
The amendments also necessitate the disclosure of any material agreements among promoters, directors, or key managerial personnel that might affect the control or management of the company. Such disclosures provide insights into the governance framework and potential conflicts of interest.
5. Recognition of Stock Appreciation Rights (SARs)
In another forward-looking move, SEBI has acknowledged Stock Appreciation Rights (SARs) as legitimate instruments of equity dilution. Companies that have granted SARs to employees are now eligible to file for IPOs, on the condition that the SARs have been exercised before submitting the Red Herring Prospectus (RHP).
This provision adds flexibility to employee compensation schemes and aligns India’s regulatory framework with global practices, where SARs are commonly used as performance-linked, non-dilutive incentives.
6. Harmonization with SEBI LODR Regulations
To promote uniformity and reduce interpretational ambiguity, SEBI has harmonized certain definitions and procedural aspects of ICDR with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). Common terms such as ‘associate’, ‘employee’, and ‘financial year’ now carry consistent definitions across both frameworks.
This alignment helps companies maintain regulatory coherence, especially during transitions from private to public ownership.
Conclusion
The 2025 amendments to SEBI’s ICDR Regulations represent a significant evolution in India’s capital market ecosystem. By removing procedural bottlenecks, encouraging transparency, and offering greater flexibility, SEBI is creating a landscape where both issuers and investors can operate with increased confidence and efficiency.
These changes are particularly impactful for small and mid-sized companies, which can now access capital markets more affordably and swiftly. At the same time, enhanced disclosures and stricter promoter obligations safeguard investor interests.
As the market continues to mature, stakeholders—whether they are promoters, legal advisors, compliance officers or retail investors—must take the time to understand and adapt to these regulatory refinements. Doing so will not only ensure compliance but also unlock strategic advantages in a highly competitive financial environment.
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