Corporate Quarterly Milestones (July-September 2025)

Following a draft notification proposing amendments to the fast-track merger framework, the Ministry of Corporate Affairs has now notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (Amendment). (To read our earlier update on the draft notification, click here.)

The Amendment expands the scope of entities eligible to undertake a fast-track merger. Previously, the fast-track merger route was limited to small companies, start-ups, and mergers between a holding company and its wholly owned subsidiary. All other mergers required approval from the National Company Law Tribunal (NCLT), which was a cumbersome and time-consuming process.

At its board meeting on 12 September 2025, the Securities and Exchange Board of India (SEBI) approved amendments to relax certain rules governing Foreign Portfolio Investors (FPI) operating in International Financial Services Centres (IFSC). The changes aim to simplify compliance, broaden eligibility, and align SEBI’s norms with those of the International Financial Services Centres Authority (IFSCA), reducing friction and encouraging greater capital inflows through IFSC platforms.

The key amendments include:

The Insolvency and Bankruptcy Board of India (IBBI) has notified the Fifth Amendment to its Insolvency Resolution Process for Corporate Persons Regulations, 2016 (CIRP Regulations), effective from 4 July 2025. The amendment aims to enhance transparency by mandating detailed disclosure of avoidance transactions (e.g., preferential transfers, undervalued transactions, fraudulent or wrongful trading) in the Information Memorandum (IM) and restricting their hidden or ‘stealth’ assignment in resolution plans.

Before the amendment, the CIRP Regulations did not require disclosure of all identified avoidance claims in the IM, nor did they mandate the IM’s periodic updating as new claims emerged. This often led to information asymmetry, with resolution applicants unknowingly submitting plans without full visibility of latent or pending claims, which result in disputes after the submission or approval of resolution plans.

To resolve this information asymmetry, the amendments provide for:

SEBI has allowed employees who are later identified as promoters or part of the promoter group in a company’s draft red herring prospectus (DRHP) to retain any options, stock appreciation rights (SAR), or similar benefits if they were granted at least one year before the DRHP filing. The SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SBEB Regulations) were amended to this effect from 8 September 2025 (2025 Amendment). This amendment ensures that founders and key managerial personnel (Executives) can continue to hold pre-IPO options without breaching the SBEB Regulations, as well as the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Under the current legal framework, only individuals falling within the definition of ‘employee’ can receive employee stock options (ESOP). In case of private limited companies, promoters and members of the promoter group are excluded from the definition of employees by virtue of Section 62(1)(b) of the Companies Act, 2013, read with Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014. Therefore, they are not eligible to receive ESOPs. However, eligible start-ups may issue ESOPs to promoters for up to ten years from the date of incorporation.

At the time of filing a DRHP for an IPO, Executives are often reclassified as promoters if they control or have significant influence over the company. The newly inserted Regulation 9A of the SBEB Regulations seeks to solve the following problems:

SEBI amended the Delisting of Equity Shares Regulations, 2021 on 3 September 2025, introducing a new Regulation 38B to address the delisting of equity shares of Public Sector Undertakings (PSU). The new framework applies to all PSUs except those operating as banks, non-banking financial companies (NBFC), or insurance companies, ensuring greater transparency and protection of minority shareholders during PSU delisting.

Under this new regulation, a PSU may be delisted from all recognised stock exchanges only if certain conditions are satisfied, including:

To enhance price fairness and investor protection, SEBI further requires that the final delisting price be at least 15% above the floor price. This pricing premium is designed to ensure that public shareholders receive a reasonable exit value and that PSU shares are not delisted at depressed valuations.

Through this amendment, a separate regime has been carved out for delisting of those specific set of PSUs that fall within the above-mentioned criteria. SEBI’s approach seems to be to strike a balance to ensure that – (i) a higher budgetary outlay for the government is avoided due to a higher floor price that may occur as a result of a thin public float (especially where this may not be commensurate with the book value of such PSUs on account of any particular economic or industry-specific factors); and (ii) selling shareholders are provided an exit at a fair price.