Sebi Pushes for Mandatory Dematerialization Pre-IPO

Sebi proposes that select shareholders, including directors and employees, hold shares in demat form before filing an IPO document. This aims to reduce risks tied to physical shares, like loss and forgery. Public comments on the proposal are invited until May 20.

The Securities and Exchange Board of India (Sebi) has announced a new proposal aimed at mandating certain key stakeholders to hold their shares in a dematerialized form prior to submitting an initial public offering (IPO) document.

By making it compulsory for directors, key managerial personnel, and other critical parties to move away from physical share certificates, Sebi seeks to address prevalent inefficiencies such as potential losses, theft, and delays associated with the transfer of physical shares.

The board is currently inviting public comments on this proposal, with a deadline of May 20 for submissions, indicating a shift towards streamlined and secure financial practices.

(With inputs from agencies.)