The Securities and Exchange Board of India (“SEBI”) held its 214th Board Meeting on June 19, 2026, approving proposed amendments to various regulations as elaborated below:
(i) Simplifying and Standardising the Framework for Transmission of Securities
The procedural and documentation requirements for transmission of securities to legal heirs and claimants of deceased investors are governed by Schedule VII of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations 2015”) and the Master Circular for Registrars to an Issue and Share Transfer Agents dated February 6, 2026. SEBI has now approved a comprehensive overhaul of the said framework.
A new category of Quick Transmission Processing shall be introduced for small-value claims, applicable to physical holdings up to INR 10,000 per listed entity and dematerialised holdings up to INR 30,000 per beneficial owner, in order to facilitate efficient processing of such claims with minimal documentation.
Further, the thresholds for simplified documentation shall be doubled, from INR 5 lakh to INR 10 lakh for physical holdings per listed company and from INR 15 lakh to INR 30 lakh per beneficial owner for dematerialised securities.
The mandatory requirement of Probate of Will shall be dispensed with, in line with the recent deletion of Section 213 of the Indian Succession Act, 1925.
Further, the requirement for submission of PAN shall be removed, keeping in view that PAN is already available at the time of demat account opening.
In addition to original/attested copy of death certificate, copy of death certificate with QR Code shall be added as an eligible document in view of ease of verification using the QR Code.
For the death of an investor outside India, verification of death certificates may additionally be obtained through overseas branches of Indian scheduled commercial banks or any foreign bank with correspondent banking relationships.
Our View
The overhaul is a substantive improvement. The reforms address the two principal deficiencies in the prior transmission framework, i.e., the absence of a fast-track route for small-value claims and divergent documentation practices across regulated entities. Further, the removal of the mandatory Probate of Will brings the framework for transmission of securities in line with the general succession laws. However, it remains to be seen how disputes arising out of competing transmission claims would be decided in the absence of a probate requirement.
(ii) Re-introduction of Open Market Buy-back Through Stock Exchanges and Review of the SEBI (Buy-back of Securities) Regulations, 2018
Open market buy-backs through stock exchanges were discontinued with effect from April 1, 2025, principally due to inequitable participation under price-time priority matching and a taxation asymmetry that has since been addressed by the Finance Act, 2026. Under the extant framework, buy-backs can be undertaken only through the tender offer route or the open market route through book-building.
SEBI has now approved amendments to the SEBI (Buy-back of Securities) Regulations, 2018 (“Buy-back Regulations 2018”) to re-introduce open market buy-back through stock exchanges as an additional route with effect from August 1, 2026. Open market buy-backs would be treated as normal trading transactions. The requirements of a separate trading window and display of the company's identity as purchaser would be accordingly dispensed with. Information regarding open market buy-backs would be disseminated electronically, in addition to public announcements through newspaper advertisements. The buy-back would be required to be completed within 66 working days from opening, with at least 40% of earmarked funds utilised in the first half of the buy-back period. Promoter and associate holdings shall remain frozen at the ISIN level during the buy-back period. Such buy-backs must also comply with minimum public shareholding requirements, and the interval between two consecutive buy-backs shall be aligned with the Companies Act, 2013, viz. one year from the closure of the previous buyback.
Further, the appointment of a merchant banker shall be at the discretion of the listed entity. If no merchant banker is appointed, the company, its compliance officer, statutory auditor, secretarial auditor, and stock exchanges may carry out such functions.
Our View
The re-introduction of open market buy-backs through stock exchanges restores an additional route for capital return that had been unavailable since April 2025, with the revised taxation framework under the Finance Act, 2026 removing the principal objection that led to its discontinuation. The freezing of promoter and associate holdings at the ISIN level during the buy-back period strengthens investor protection by eliminating the risk of inadvertent promoter participation.
(iii) Utilisation of Intraday Borrowing by Mutual Funds
Under the SEBI (Mutual Funds) Regulations, 2026 (“MF Regulations 2026”) and the circular dated March 13, 2026, intraday borrowings by mutual funds were permitted exclusively for bridging the gap between unitholder payouts and guaranteed same-day receivables from the Government of India, the Reserve Bank of India (“RBI”), and clearing corporations, including Clearing Corporation of India Limited (“CCIL”).
SEBI has approved an amendment to the MF Regulations 2026 to permit intraday borrowings for bridging differences arising from pay-in or pay-out settlement timing mismatches within asset classes, forex settlements, and payments for mark-to-market of derivative positions. The quantum is capped at receivables sighted during the day. However, borrowings beyond this cap may be availed for meeting unit holder payouts, up to 20% of the net assets of the scheme, as permitted under Regulation 42(1) of the MF Regulations 2026.
All intraday borrowings must be repaid by end of day and any position converted to overnight borrowing must remain within applicable regulatory limits and permitted purposes. Intraday borrowings may not be used as a source of leverage, and the mutual fund shall be required to maintain adequate documentation and a policy approved by the AMC/Trustee board, for utilisation of the facility.
Our View
The amendment is a welcome step towards reducing immediate stresses on mutual funds, recognising the operational reality of fund management, where settlement timing mismatches across asset classes, forex settlements, and derivative mark-to-market obligations can create intraday liquidity gaps that are structural rather than a product of poor fund management. Capping intraday borrowings at receivables sighted during the day ensures the facility cannot function as a leverage mechanism, and the requirement that all intraday positions be repaid by end of day or rolled over in line with the general regulatory framework on borrowings ensures that the intraday borrowing facility is not used to bypass the said framework.
(iv) Green-Channel: AIF Rollout Upon Document Acknowledgement (GARUDA) Mechanism for Processing of Placement Memorandum of Alternative Investment Funds
Under the extant framework, Alternative Investment Funds (“AIFs”) registered under the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations 2012”) were required to file their Private Placement Memoranda (“PPMs”) with SEBI through a registered Merchant Banker and to observe a mandatory 30-working-day waiting period before launching a new scheme. AI-only schemes, limited to Accredited Investors (“AIs”), and Angel Funds were subject to such requirements as well.
SEBI has now approved the GARUDA Mechanism through amendments to the AIF Regulations. For Non-Accredited Investor Schemes (“Regular Schemes”), excluding Large Value Funds (“LVFs”), AI-only schemes, and Angel Funds, the waiting period shall be reduced to 10 working days. For AI-only schemes and Angel Funds, comprising exclusively AIs, the requirement to file PPMs through a Merchant Banker shall be dispensed with; these schemes would be permitted to launch immediately upon the grant of SEBI registration or upon filing the PPM directly with SEBI.
Our View
The GARUDA Mechanism would meaningfully reduce the time and cost of bringing new AIF schemes to market, with the 10 working-day window for Regular Scheme enabling faster deployment of capital. The complete exemption of AI-only schemes and Angel Funds comprising only AIs from the Merchant Banker filing requirement recognises that AIs do not necessarily need the same mandatory safeguards as retail participants, and the ability to launch immediately upon filing is a proportionate and well-calibrated response to the sophistication of that investor base.
(v) Amendments to the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008
SEBI has approved amendments to the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (“SDI Regulations 2008”) to align the framework governing listed securitisation transactions with the RBI's securitisation framework and develop the listed Securitised Debt Instruments (“SDIs”) market. The key approved changes are as follows.
a. Single-Asset Securitisation by RBI-Regulated Entities
RBI-regulated entities, including banks and Non-Banking Financial Companies (“NBFCs”), shall be exempted from the extant 25% obligor concentration limit under Regulation 19A(a) of the SDI Regulations 2008, thereby permitting single-asset securitisation. Disclosure of the resulting concentration risk shall be required as a prominent risk factor in the offer document.
b. Shift of Disclosure Obligations to the Servicer
The responsibility for periodic disclosures and related reporting obligations under Regulations 10A and 11(3) of the SDI Regulations, previously placed on the originator, shall be shifted to the servicer, in recognition of the servicer's operational role in administering the underlying asset pool.
c. Governance of SPDE Board of Trustees
For Special Purpose Distinct Entities (“SPDEs”) where the originator is an RBI-regulated entity, the originator's representation on the Board of Trustees shall be limited to a maximum of one representative, aligning with the RBI's securitisation framework.
d. Clarification on SPDE Asset Acquisition Restrictions
The restriction on a SPDE acquiring debt or receivables from the originator shall be clarified to operate where the originator is part of the same group as the trustee, or is under the same control as the trustee, removing the prior textual ambiguity that had been read as applying to the originator-SPDE relationship.
e. Power to Appoint a Replacement Trustee
SEBI shall be empowered to appoint a new trustee in place of a trustee whose registration is suspended or cancelled, facilitating continuity of the securitisation structure. SEBI retains its discretionary power to wind up SPDE schemes in exceptional circumstances such as systemic risk or fraud.
Our View
The amendments are a welcome step towards aligning the listed securitisation framework with the RBI's existing framework for regulated entities, removing a regulatory inconsistency that had constrained the development of the listed SDI market. Permitting single-asset securitisation by banks and NBFCs expands the range of transactions that can access listed markets, and shifting disclosure obligations to the servicer reflects the operational reality that the servicer is best placed to collect and report on underlying asset performance. The empowerment of SEBI to appoint a replacement trustee in the event of suspension or cancellation of registration is an important change that would help ensure continuity of securitisation structures and protects investor interests without requiring a wind-up.
(vi) Amendments to the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015
SEBI approved amendments to the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (“ILMDS Regulations 2015”) to develop the municipal bond market.
Municipalities shall be expressly permitted to raise funds for refinancing of existing project debt, subject to prescribed disclosures in the offer document.
Where two or more municipalities seek to raise funds through a pooled finance vehicle, they shall be required to make the disclosures prescribed by SEBI in the offer documents. Further, SEBI shall specify the modalities for such fundraising, including the agreement between municipalities and the pooled vehicle, and the escrow account mechanism.
In order to encourage retail participation, issuers of municipal debt securities shall be permitted to offer incentives, in the form of additional interest or a price discount, to specified categories of investors including senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, and retail individual investors. The face value and trading lot for privately placed municipal debt securities would be specified as INR 1 lakh or INR 10,000, provided that the latter shall be required to carry a fixed maturity and no structured obligations.
Other amendments shall include a permission to advertise public issued through electronic modes; and the extension of financial reporting timelines, from 45 to 60 days for unaudited half-yearly results and from 60 to 90 days for audited annual results.
Our View
The amendments are a welcome step towards encouraging wider participation in municipal debt securities. Permitting refinancing as an objective for fund-raising gives municipalities a credible tool for liability management, and the INR 10,000 face value option has the potential to broaden the investor base materially by bringing municipal debt securities within reach of retail participants. The incentive structure for specified investor categories and the extended financial reporting timelines reflect a practical recognition of the operational constraints municipalities face, and together these changes meaningfully improve the viability of the municipal bond market as a financing channel.
