Partner: Ankush Goyal,
Senior Associate: Rohan Kohli, Associate: Anirudha Sapre
Key Developments
1.RBI proposes to expand access to offshore debt
On 3 October 2025, the Reserve Bank of India (RBI) released a draft framework proposing a comprehensive revision of the External Commercial Borrowing (ECB) regime through the Foreign Exchange Management (Borrowing and Lending) (Fourth Amendment) Regulations, 2025 (Draft Amendments).1 The Draft Amendments seek to widen access to foreign capital and further liberalise the ability of Indian corporates to raise overseas debt.
Key highlights include:
- Pricing: ECBs are currently subject to an “all-in-cost” ceiling, typically capped at a spread of 450–500 basis points over the benchmark rate, which has historically limited lenders’ interest in this route. The Draft Amendments propose to eliminate this ceiling and allow interest and other costs to be determined by prevailing market conditions, subject to the authorised dealer bank’s satisfaction.
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Minimum Average Maturity Period: Currently ranging from one to ten years (depending on end use of funds), the minimum average maturity period is proposed to be shortened to three years, with limited exceptions allowed for the manufacturing sector. This rationalisation is expected to make ECBs more commercially viable and better aligned with typical financing needs.
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End-use restrictions: The Draft Amendments also aim to liberalise end-use restrictions, and ECBs are proposed to be permitted for acquisition financing, mergers, amalgamations, and certain primary market investments. Activities permitted under the foreign direct investment policy, including specific real estate and agricultural activities, are also proposed to be included. Further, on-lending of ECB proceeds by borrowers is also proposed to be permitted in limited circumstances, such as by RBI-regulated entities and intra-group lending.
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Borrowing Limit: Under the current regime, eligible borrowers can only raise up to USD 750 million per year, while maintaining a debt-to-equity ratio of 7:1. The Draft Amendments propose to remove this ratio and provide for borrowing limits to be the higher of USD 1 billion or 300% of the borrower’s net worth.
These amendments are expected to reshape India’s foreign debt landscape by encouraging renewed participation from overseas lenders under a more liberal, market-oriented, and investor-friendly ECB framework.
2.SEBI enhances transparency and protection of minority interests in takeover transactions
On 5 December 2025, the Securities and Exchange Board of India (SEBI) implemented key amendments to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Code).2
Key highlights of these amendments include:
- Mandatory independent valuations for infrequently traded shares: SEBI can now direct independent valuations in cases involving infrequently traded shares to protect investors in situations where market prices may not adequately represent the fair value of a security due to limited trading activity. SEBI can require the acquirer to engage a registered independent valuer to determine the appropriate share price, with the associated costs to be borne by the acquirer.
This mechanism is intended to protect public shareholders from the offer price being influenced by volatile or artificially low market data, thereby preserving fairness in exit opportunities for minority and retail investors.
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Valuation to be conducted by a registered independent valuer: Previously, for transactions where listed securities were used as consideration instead of cash, the Takeover Code mandated that the acquirer procure a valuation certificate from an independent merchant banker, or an independent chartered accountant, to determine the valuation of the share value offered. Post the amendment, such valuation can only be conducted by an independent registered valuer fulfilling the eligibility criteria and the prescribed valuation standards in compliance with the Companies Act, 2013.
This amendment strengthens the valuation framework by shifting valuation duties to registered valuers operating under a uniform statutory regime and by empowering SEBI to directly mandate and oversee such valuations.
These regulatory changes reflect SEBI’s objective of bolstering investor protection and improving governance standards in takeover scenarios. By tightening valuation standards, the changes aim to reinforce trust in open offer processes. The amendments underscore SEBI’s intent to achieve better price discovery for minority shareholders, particularly in complex deal structures involving mergers, indirect acquisitions, or strategic share purchases.
3.SEBI relaxes thresholds to procure approval for material related party transactions
On 19 November 2025, SEBI issued amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Fifth Amendment).3
The key features of the LODR Fifth Amendment are:
- Increased thresholds: Previously, any Related Party Transaction (RPT) exceeding the lower of INR 1,000 crore or 10% of a company’s consolidated annual turnover was deemed material and required shareholder approval. The LODR Fifth Amendment replaces this static threshold with a turnover-based graded scale by inserting a new Schedule XII to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). Larger companies with higher turnover will have higher materiality thresholds, while smaller entities remain under tighter constraints.
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Audit Committee review: Prior to the LODR Fifth Amendment, RPTs entered into by a subsidiary of a listed company (where the listed company was not itself a party) required approval of the listed company’s audit committee if such RPTs exceeded 10% of the annual standalone turnover of the subsidiary per the last audited financial statements. Post the LODR Fifth Amendment, such approval is required only where such RPTs are above INR one crore and exceed the lower of – (a) the above-mentioned threshold; or (b) materiality thresholds newly introduced in Schedule XII to the LODR. Schedule XII provides for various materiality thresholds that are pegged to the consolidated turnover of a listed entity.
Further, for newly incorporated subsidiaries of a listed company (i.e., that do not have audited financial statements for at least one year), the above-mentioned tests apply in a similar manner. However, instead of the 10% of the annual standalone turnover threshold in (a) above, a threshold of 10% of the paid-up share capital and securities premium account of the subsidiary has been prescribed.
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Omnibus approval for material RPTs: SEBI has now restricted the duration of omnibus approvals for material RPTs. If such approval is granted in an Annual General Meeting (AGM), its validity extends only until the next AGM. If granted at any other general meeting, it will expire within one year. This change enhances accountability by enforcing periodic shareholder review of high-value or recurring RPTs, preventing long-term approvals from escaping scrutiny.
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Stricter timelines: The amendments impose stricter timelines for annual report submissions. Listed companies must now file annual reports with stock exchanges no later than the date on which these reports are dispatched to shareholders or submitted to regulatory authorities. Additionally, all payments, such as dividends or interest on securities, must be routed exclusively through electronic modes, like National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS), or Electronic Clearing Service (ECS), with physical methods like cheques or warrants explicitly discontinued.
These amendments seek to scale compliance obligations based on the company’s size, while strengthening governance, including governance of subsidiaries and financial disclosures. Through the LODR Fifth Amendment, SEBI’s focus remains on improving transparency, reducing risks associated with group-level transactions, and ensuring listed companies remain accountable to public shareholders.
4.Government proposes consolidation of various SEBI statutes: Securities Market Code, 2025
On 18 December 2025, the Lok Sabha introduced the Securities Market Code, 2025 (Proposed Code) to repeal the principal statutes governing listed entities and market intermediaries, namely (a) The SEBI Act, 1992; (b) The Depositories Act, 1996; and (c) The Securities Contracts (Regulations) Act, 1956 (collectively, the Acts), and consolidate the same under a modern code.4
The Proposed Code introduces several major reforms, including:
- Unified regulatory framework: The three old Acts are proposed to be merged into a single code, with simplified language to remove duplication. The definition of “securities” under the Proposed Code is a broader list of securities than the current definition under the Securities Contracts (Regulations) Act, 1956, and also includes any “regulated instruments” that are permitted for listing. Such regulated instruments are further defined broadly to cover instruments regulated by any authority/body/department of the Central or State government authorised under any law for regulating goods, services, activities or transactions. This provision is intended to allow a broad range of securities and products to be listed in the future and brought under SEBI’s regulatory framework.
- Governance and structure of SEBI: SEBI’s board is proposed to be expanded from nine to 15 members, including new seats for the finance ministry and RBI nominees. To make the functioning of SEBI more transparent, conflict-of-interest rules are proposed to be tightened, which include disclosure of any direct or indirect financial interest (including that of family members) and removal by the government of members having prejudicial interests.
- Time-bound enforcement: The Proposed Code imposes strict timelines on investigations and interim orders. SEBI must complete its probe within 180 days, and any extensions granted beyond the prescribed timeline must be approved by a whole-time member of SEBI. It also introduces an eight-year statute of limitations on starting new inspections or investigations (except in certain cases).
- Separation of powers: Crucially, the Proposed Code introduces a structural separation between investigative and adjudicatory functions within SEBI, creating an internal arm’s-length framework aimed at strengthening procedural fairness. Fact-finding and decision-making are institutionally and functionally divided: only the SEBI Chairperson, whole-time members, or specifically designated officers may act as investigating or adjudicating officers, and an officer who has participated in the investigation is expressly disqualified from acting as an adjudicator in the same matter. The Proposed Code also prohibits an adjudicating officer who has issued a show-cause notice from subsequently conducting the underlying inspection or investigation, or deciding on settlements related to that notice. This “arm’s length” separation is intended to ensure fair procedure.
- Proportionate penalties: The Proposed Code formally distinguishes minor technical lapses from serious abuses. Routine violations such as fraudulent or unfair trading practices are decriminalised (punishable only by fines), whereas “market abuse” offences (insider trading, fraud, price manipulation, etc.) remain criminally punishable. Adjudicating officers will have powers like “disgorgement of ill-gotten gains”, which must be used to compensate harmed investors. The overall enforcement approach materially reduces the compliance burden on market participants for technical issues while preserving deterrence for wilful misconduct.
- Investor protection measures: The Proposed Code mandates a statutory Investor Charter and formalises time-bound grievance mechanisms. If the Proposed Code is enacted, SEBI will specify service standards (as promised in its charter) and require all intermediaries and issuers to maintain complaint redressal systems. Notably, it re introduces an independent SEBI Ombudsperson to hear unresolved investor grievances.
The Proposed Code aims to introduce time-bound investigations, separation of enforcement roles, proportionate penalties and a coherent, principle-based structure that reduces ambiguity and enhances governance across the securities ecosystem.
[1] The Draft Amendments can be accessed here.
[2] Link to the amendments to the Takeover Code can be found here.
[3] Link to the LODR Fifth Amendments can be found here.
[4] Link to the Proposed Code can be found here.
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