Sebi Starts Overhaul of LODR Disclosure Framework
The Securities and Exchange Board of India has started an extensive review of the Listing Obligations and Disclosure Requirements (LODR), the rulebook that guides ongoing compliance for all listed companies. The move marks the beginning of a broad clean-up aimed at making disclosures clearer and more practical.
At the CII Financing Summit 2025, Sebi chairperson Tuhin Kanta Pandey said the work is still in its early phase, with a consultation paper expected “soon”. He did not specify when it would be released, noting that the size of the regulation means the process cannot be rushed. “That’s (LODR) a big regulation, and the process has begun,” he said. “We will have lots of consultation and put out a consultation paper and it will take some time.”
What is prompting Sebi to revisit one of its biggest regulations?
He added that the objective is refinement rather than expansion. “Our agenda is not about adding more rules. It is about shaping a smarter rulebook. One that is simpler to understand, proportionate to the risks it seeks to address, and supportive of innovation.”
Why Now, and What Could Change?
Market participants point out that the surge in equity issuance may be influencing the timing. With companies raising more than ₹2 trillion so far, this financial year, the volume of IPOs has increased pressure on the quality and consistency of disclosures. As one senior consulting executive noted, heavy listing activity can cause disclosure standards to drift, making a deeper review necessary.
Legal experts believe Sebi is unlikely to overhaul the entire regulation. Instead, the focus may be on pruning areas that have grown complicated over time. Abhiraj Arora of Saraf and Partners said, “They may need to reach out to companies and have a consultation process and state out the mischief they have observed, which needs amendments and whether it can be implemented without any major amendment or by way of a circular.”
Sebi has already adjusted parts of the framework this year. The threshold for High Value Debt Listed Entities was lifted to ₹1,000 crore, and certain SME-listed companies were brought under related-party transaction norms based on their capital or net worth.
Which Rules Will Sebi Examine Next?
Alongside LODR, Sebi is preparing a review of settlement regulations, with another consultation paper expected shortly. Pandey said a “comprehensive review of Sebi’s regulations is underway after due public consultations, an exercise intended to eliminate redundancy, remove ambiguity and update outdated constructs.” This includes stockbroker norms, mutual fund rules and settlement processes.
The regulator is also close to enabling a closing-auction mechanism for equities. After extensive discussions with exchanges and market participants, Sebi is finalising the framework. The mechanism is expected to improve price discovery in the final stretch of trade and reduce the volatility that often appears near market close. Exchanges have supported the move, pointing out that similar auctions are standard in global markets.
What is the Status of the NSE IPO Approval?
On the long pending NSE listing, Pandey said that he cannot confirm anything until the regulator issues a formal no objection certificate. He emphasised that IPOs serve both capital raising and investor exits. “An IPO allows both exit and fundraising. It depends on the specific IPO. Many companies are already well-established by the time they come to the market. When they become mature, it is natural that some investors will choose to exit because a premium has already been created,” he said.
What comes next?
Sebi is also working to simplify fundraising for companies heading toward an IPO while holding pledged pre-IPO shares. A recent consultation paper proposes a mechanism that ensures lock-in rules continue to apply even if the pledge is invoked or released, helping avoid any delay in listing.
Conclusion
With multiple consultation papers in the pipeline, the regulator is moving towards a more coherent and updated rulebook. The LODR review sits at the centre of this effort and is expected to shape disclosure practices for years ahead.
Sources
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