Mumbai, June 19 (UNI) Market regulator, The Securities and Exchange Board of India (SEBI), has relaxed its rules around employee stock options (Esops) for start-up founders classified as promoters.

The decision will allow such founders to retain or exercise stock options granted at least one year prior to the filing of a Draft Red Herring Prospectus (DRHP), even after the company goes public.

Until now, Sebi regulations barred promoters from holding or being granted share-based benefits such as Esops. If a founder holding such benefits was designated as a promoter at the time of DRHP filing, they were required to liquidate these holdings before the IPO—posing challenges for many startups navigating the listing process.

“This provision has been found to be impacting founders classified as promoters at the time of filing of DRHP,” said Sebi in its board meeting note, adding that the revised framework would provide continuity and reward long-term commitment from founders.

Sebi chairman Tuhin Kanta Pandey stated that the board had approved a proposal 'to facilitate founders who received such benefits at least one year prior to the filing of DRHP with the board, to continue holding, and / or exercising such benefits even after being specified as the promoter/s and the company becoming a listed entity.'

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