SEBI Reviews Framework for Issue Proceeds Utilization and Related-Party Transactions

The Securities and Exchange Board of India (SEBI) is currently reviewing the framework for monitoring and disclosing the utilization of issue proceeds. The objective of this regulatory review is to improve timely disclosures and streamline the overall compliance process for listed entities.

Speaking at the Institute of Directors’ Annual Directors’ Conclave 2026 in New Delhi on Saturday, SEBI Chairman Tuhin Kanta Pandey emphasized that volume does not equate to transparency. He stated that true transparency relies on the quality, timeliness, and usefulness of the information provided by companies.

As part of its broader regulatory efforts, the market regulator is also examining transactions involving potential conflicts of interest. Pandey noted that these transactions must be subjected to appropriate scrutiny through the framework governing related-party transactions.

"We propose to further clarify the framework on related-party transactions, so that the requirements are clear and workable for issuers while retaining the necessary safeguards for investors," Pandey said during the conclave.

Additionally, SEBI is looking at measures to reduce avoidable compliance burdens for businesses. For companies listed on multiple stock exchanges, the regulator is proposing a framework to prevent the duplication of fines levied by different exchanges for the same compliance matter.

Addressing the balance between rigorous oversight and operational efficiency, Pandey remarked that good governance requires regulations to remain proportionate without creating unnecessary duplication. He noted that the primary objective is to make the regulatory environment more efficient while preserving its core purpose.

The regulator has also progressively strengthened the framework surrounding the disclosure of material events and information. These measures include specific materiality thresholds and defined timelines designed to bring greater consistency and timeliness to market disclosures.

"SEBI's initiative to review the framework for issue proceeds and reduce duplicate compliance burdens is a welcome step for the business ecosystem. Streamlining regulations for multi-exchange listed entities and clarifying related-party transactions will lower operational friction while maintaining necessary investor safeguards. For growing enterprises and businesses navigating the capital markets, clearer timelines and quality disclosures ultimately build long-term trust and governance stability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes