MUMBAI: The Securities and Exchange Board of India (Sebi) is weighing whether—and to what extent—it can step into India’s unlisted share market, a segment that currently sits largely outside the market regulator’s formal jurisdiction.
“This is under discussion with the Ministry of Corporate Affairs. We have to see whether we do have regulatory powers to get into an area which is an unlisted area and how far that unlisted area goes,” said Sebi chief Tuhin Kanta Pandey on the sidelines of the Association of Investment Bankers of India (AIBI) annual convention 2025-26 on Thursday.
The unlisted market comprises equity shares of companies that are not listed on any stock exchange and therefore do not trade publicly. Investors typically gain exposure through private transactions with existing shareholders, employee stock option plans or intermediaries.
Unlike listed companies, unlisted entities are not subject to stringent, continuous disclosure requirements, often resulting in limited or delayed information on financial performance and business risks. Oversight of this market largely rests with the Ministry of Corporate Affairs, while Sebi’s regulatory role generally begins only when a company seeks to list its shares.
Pandey flagged pricing mismatches between the unlisted shares and valuations discovered during the initial public offering (IPO) book-building process as a key concern.
“There is of course an issue that when it comes for listing, there is a mismatch between what are the pricing they have done on the unlisted side and what is the prices which are discovered when the book is built,” Pandey said.
He added that rules applicable to listed entities cannot simply be replicated in the unlisted market, reiterating that Sebi’s involvement traditionally begins only when a company is approaching a listing.
On the National Stock Exchange’s (NSE) proposed IPO, Pandey said Sebi is currently evaluating the exchange’s settlement application. “That is in the process of our different committees. But in principle, we agree with the settlement.”
Last week at a press conference, Pandey had said that Sebi is likely to issue a no-objection certificate (NOC) for the NSE IPO by the end of the month.
The exchange’s listing plans have been on hold due to the dark fiber case, which involved allegations that certain high-frequency traders received preferential access to the exchange’s co-location servers between 2010 and 2014 through faster private communication lines.
Unlike regular companies, market infrastructure institutions, including stock exchanges, depositories and clearing corporations, are required to secure a no-objection certificate from Sebi before filing their draft red herring prospectus.
Pandey also flagged persistent shortcomings in corporate disclosures, warning that these gaps undermine transparency and slow fundraising by triggering repeated regulatory queries.
“Sebi continues to observe recurring disclosure gaps that reduce transparency and investor understanding. These gaps also lengthen the fundraising timeline through repeated regulatory queries,” he said, adding that the regulator has identified several key areas that need improvement.
Disclosures related to capital structure should clearly outline past capital raisings, preferential allotments and any changes in control, particularly those undertaken close to an IPO, he added.
