India's securities regulator has clarified that the off-market sale of unlisted equity shares by existing shareholders through private negotiations will not be treated as a deemed public issue, provided the number of purchasers does not exceed 200.
The clarification, issued on Friday, aims to provide regulatory certainty for private placements and secondary market transactions in unlisted companies.
The ruling distinguishes between private negotiations and public offerings, allowing existing shareholders to transfer stakes to a limited group of buyers without invoking the stringent compliance requirements associated with public issues.
This distinction is critical for unlisted companies and their investors, who often face liquidity constraints and regulatory hurdles when attempting to exit or restructure holdings.
The clarification comes amid ongoing efforts by SEBI to streamline regulations for unlisted securities and improve market efficiency.
By defining the threshold for private placements, the regulator seeks to balance investor protection with the need for liquidity in the unlisted equity market.