SEBI Chairman Says Comprehensive Review of SME IPO Rules Is Underway

The Securities and Exchange Board of India is carrying out a comprehensive review of the rules governing public issues by smaller companies, SEBI Chairman Tuhin Kanta Pandey said at the FICCI Capital Markets Conference on 19 August 2026. The review comes as the regulator examines whether parts of the existing framework, including market-making requirements, are adding avoidable costs for companies seeking access to the public market.

The development is relevant not only to issuers and investment bankers but also to chartered accountants, company secretaries, auditors, valuation professionals and finance teams involved in IPO readiness, due diligence, financial reporting and post-listing compliance.

SME IPO framework is under a comprehensive review

According to the Chairman's remarks, SEBI is reassessing the framework applicable to IPOs by small companies. One issue specifically highlighted was the cost impact of market-making requirements. Market making is intended to support liquidity in less-traded securities, but the regulator is examining whether the existing design is creating a disproportionate burden for smaller issuers.

The review should be seen as an ongoing regulatory exercise rather than an immediately effective rule change. Companies and advisers should therefore continue to follow the existing SEBI framework until any consultation paper, amendment or circular is formally issued.

Delisting rules are also being examined

The Chairman also indicated that SEBI is reviewing the delisting framework. Delisting rules affect promoters, public shareholders, merchant bankers, valuers and compliance teams because they determine how an issuer can exit the public market and how public shareholders are treated during that process.

No final amendment was announced in the speech. For professionals advising listed entities, the practical point is to track subsequent SEBI consultation papers and formal regulatory amendments rather than treat the conference remarks as a change in law.

SEBI wants to support global fund management from India

Another area highlighted was a framework intended to support global fund-management activity from India. The Chairman said proposed changes to the portfolio-manager framework are aimed at enabling decision-making and fund-management functions to operate more effectively from India.

This direction is significant for portfolio managers, investment advisers, fund structures, tax teams and cross-border compliance professionals. Any final framework could have implications for operating models, investment-management substance, governance and the location of decision-making functions.

Short selling, securities lending and debt-market reforms remain on the agenda

The Chairman also referred to reviews of the Securities Lending and Borrowing Mechanism and the short-selling framework as part of efforts to deepen liquidity in the cash market. In debt markets, SEBI is considering measures such as greater flexibility around International Securities Identification Numbers, support for ESG debt instruments and technology-led improvements in the corporate bond market.

These proposals fit within a broader push to deepen Indian capital markets while improving ease of doing business. However, each measure will need to be assessed on the basis of the final consultation text, circular or regulation issued by SEBI.

Closing auction mechanism and market manipulation

Pandey also addressed the recently introduced closing auction session used for determining closing prices of frequently traded securities. He said the new mechanism improves the regulator's ability to detect manipulation more quickly and warned that SEBI would take strict action where misconduct is identified.

For listed-company finance teams and market participants, this reinforces the need for robust trade-surveillance awareness, internal controls and documentation around transactions that may attract regulatory scrutiny.

What CAs and finance professionals should track next

- Any SEBI consultation paper or amendment specifically covering SME or small-company IPOs.

- Changes to market-making requirements, issue-process costs or eligibility conditions.

- Proposals affecting delisting and shareholder-exit mechanics.

- Portfolio-manager reforms linked to global fund management from India.

- Changes to short selling, securities lending and corporate bond market structure.

Useful official links

SEBI Chairman address at FICCI Capital Markets Conference

Key takeaway

SEBI has not announced an immediate rule change, but the Chairman's August 19 address confirms that multiple important market-access and market-structure frameworks are under active review. Issuers and advisers should prepare for consultation-driven changes while continuing to comply with the rules currently in force.