Mumbai, June 18
The Securities and Exchange Board of India (SEBI) is holding its board meeting on Wednesday, and some important decisions related to startups, public sector companies, and foreign investors are likely to be on the agenda.
One of the key topics expected to be discussed is whether startup founders can continue to hold employee stock options (ESOPs) after their company goes public.
Currently, once a startup founder is classified as a promoter during the IPO process, they are no longer allowed to receive ESOPs.
However, SEBI believes the rules are not clear about whether founders who were granted ESOPs before being labeled promoters can still exercise their stock options -- both vested and unvested -- after the IPO.
This is especially relevant for many new-age tech startups, where founders often take ESOPs instead of salaries in the early days.
As these companies raise funds from investors, the founders’ shareholding gets diluted. To address the confusion, SEBI had issued a consultation paper on March 20, 2025, seeking public opinion on this issue.
The regulator is also considering introducing a one-year ‘cooling-off’ period between the grant of ESOPs and the filing of IPO papers.