India’s market regulator, the Securities and Exchange Board of India (SEBI), is contemplating the regulation of the country’s unlisted share market, currently operating outside its direct control, as stated by SEBI chairperson Tuhin Kanta Pandey. The issue is under discussion with the Ministry of Corporate Affairs, revealed Pandey during the Association of Investment Bankers of India’s annual convention for 2025–26. SEBI is evaluating its legal authority to oversee companies not listed on stock exchanges and the extent of such regulation.
The unlisted share market comprises shares of companies not traded on stock exchanges, often acquired through private deals, employee stock option plans, or intermediaries. These companies, due to their unlisted status, are not bound by stringent and continuous disclosure norms, resulting in investors having limited or delayed access to information about a company’s financial status and business risks. SEBI is particularly concerned about the significant price disparities between the unlisted market and valuations during initial public offerings (IPOs).
SEBI emphasized the challenge of discrepancies between prices in private deals and those during IPO book-building, leading to confusion and potential risks for investors. It was clarified that rules applicable to listed companies cannot be directly imposed on unlisted firms. SEBI traditionally steps in for regulatory oversight when a company prepares for share listing. Regarding the National Stock Exchange’s proposed IPO, SEBI is currently scrutinizing the exchange’s settlement application, expressing general agreement with the proposal, which is undergoing review by various committees.
