Market regulator SEBI (Securities and Exchange Board of India) has made changes in the IPO rules, giving relief to startup founders who want to list their companies in the stock market.

According to the new rule, employees can now retain their Employee Stock Options (ESOPs) as long as they were allotted at least one year before filing IPO documents.

Earlier, if a founder was considered a promoter of the company and had ESOPs, they were required to surrender them before the IPO.

With this change, founders can keep their ESOPs, making the IPO process smoother for startups. SEBI has issued an official notification about this decision.

Changes in Trade Settlement Schedule

SEBI has also announced adjustments in the settlement schedule of the equity and derivatives segment.

Due to Ganesh Chaturthi (5th September) and Eid-e-Milad (8th September), those days were marked as settlement holidays.

The trades made on these dates will now be settled later, ensuring market stability and avoiding inconvenience for investors.

Benefits for Startups and Reverse Flipping

In its notification, SEBI clarified that any employee or founder listed as a promoter in the draft offer document, who has received ESOPs, Stock Appreciation Rights (SARs), or similar benefits at least one year before filing IPO papers, can continue to hold them.

This rule is especially beneficial for startups preparing to list in India, particularly those engaged in reverse flipping (shifting their base back to India after being registered abroad).

Now, founders will not be forced to sell their ESOPs and can retain these benefits even after listing.

This change is expected to act as a booster for reverse flipping and make the IPO journey easier for Indian startups.