SEBI announced that the Board cleared a wide-ranging set of reforms aimed at making stock market rules simpler, mutual funds cheaper and public issues more investor-friendly, at its 212th meeting held in Mumbai on Wednesday. Among the major decisions was the regulator’s move to make public issues simpler for small investors.
In IPOs, where key disclosures are often spread across bulky offer documents, a concise, standardised “abridged prospectus” will now be made available right from the draft offer document (DRHP) stage, not just at the final offer stage, and the regulator plans to drop a separate offer document summary once this is in place.
“In order to increase the engagement and participation of the retail investors in the IPO process, the Board has approved that a focused, concise and standardised summary of offer documents in the form of a draft abridged prospectus shall be available at the DRHP stage as well, in addition to the current requirement of filing of abridged prospectus at the RHP stage. Board has also approved the proposal to rationalise the disclosures in the abridged prospectus. The abridged prospectus shall be hosted on the websites as required under these regulations. With the availability of abridged prospectus, the requirement to prepare an offer document summary may be dispensed with in consultation with the Central Government,” SEBI stated.
Other decisions cover new rulebooks for stock brokers and mutual funds, incentives in public debt issues and changes to norms for large debt-listed companies and credit rating agencies.
The Board approved a complete replacement of the 1992 Stock Brokers Regulations with a new Securities and Exchange Board of India (Stock Brokers) Regulations, 2025.
The new framework reorganises the rulebook into eleven chapters, removes outdated and duplicate provisions, and updates key definitions such as “clearing member”, “proprietary trading member” and “designated director” for greater clarity.
SEBI has also allowed joint inspections and electronic maintenance of records, and rationalised criteria for identifying “qualified stock brokers” so that those with large active client bases and high trading volumes come under closer supervision. The rewritten rulebook is shorter, with pages cut from 59 to 29 and word count halved from about 18,800 to 9,073, which SEBI says should improve readability and compliance.
A major highlight is the overhaul of the mutual fund regulations, with SEBI (Mutual Funds) Regulations, 2026 replacing the three-decade-old 1996 framework.
The new rules consolidate scattered provisions, streamline eligibility criteria for sponsors (including “Mutual Fund Lite”), and reorganise the roles of asset management companies and trustees under clearer thematic headings.
SEBI also reworked the expense ratio framework by defining a Base Expense Ratio (BER) that excludes statutory levies like GST, STT and SEBI fees, which will now be charged on actuals over and above the BER.
Base caps for open-ended equity schemes, for example, will gradually reduce with higher AUM slabs, and limits for index funds, ETFs, and fund-of-funds have been trimmed, though some proposed cuts for large equity schemes were eased to avoid excessive pressure on fund houses.
In the corporate bond market, issuers of non-convertible debt will be allowed to offer incentives like extra interest or issue-price discounts to specific categories such as senior citizens, women, armed forces personnel and retail investors, but only to the original allottee and not on subsequent transfers. SEBI has further decided to let credit rating agencies rate financial instruments overseen by other financial regulators even when those regulators have not issued detailed rating guidelines, subject to clear labelling and disclosure that SEBI’s investor protection mechanisms do not apply to those activities.
For large debt-listed entities, SEBI has relaxed the definition of “High Value Debt Listed Entities” by raising the outstanding non-convertible debt threshold from Rs 1,000 crore to Rs 5,000 crore, a move aimed at easing compliance burdens on NBFCs, housing finance companies and other frequent bond issuers.
