File picture: Tuhin Kanta Pandey, Chairman, SEBI
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SHASHANK PARADE
The Securities and Exchange Board of India (SEBI), is examining whether it should step in to regulate the fast-growing unlisted share market, which currently operates largely outside its direct oversight, Chairman Tuhin Kanta Pandey said on Thursday.
Speaking on the sidelines of the Association of Investment Bankers of India’s (AIBI) annual convention, Pandey said SEBI is discussing the issue with the Ministry of Corporate Affairs to assess whether the regulator has the legal authority to oversee companies that are not listed on stock exchanges, and if so, how far such regulation can extend. “SEBI first needs to examine whether it has the legal authority to regulate companies that are not listed on stock exchanges and how far such regulation can extend,” he said.
The unlisted share market comprises equity in companies that are not traded on recognised stock exchanges, with investors typically accessing these shares through private deals, employee stock option plans or intermediaries. Since these companies are outside the listed ecosystem, they are not subject to continuous disclosure norms, often leaving investors with limited, delayed or uneven information on financial performance and business risks.
Valuation concerns
A key concern for the regulator is the wide divergence often seen between prices discovered in the unlisted market and valuations that emerge when companies eventually tap public markets. “Prices agreed upon in private deals often do not match the prices discovered during the IPO book-building process, creating confusion and potential risks for investors,” he said.
Traditionally, SEBI’s regulatory role begins once a company prepares to list its shares. Any move to regulate unlisted markets would therefore mark a significant shift, especially as participation in pre-IPO and unlisted shares has risen sharply in recent years, driven by investor appetite for early-stage exposure.
Separately, on the National Stock Exchange’s long-pending initial public offering, Pandey said SEBI is currently examining the exchange’s settlement application. “In principle, we agree with the settlement,” he said, adding that the proposal is being reviewed by various internal committees.
IPO boom
Earlier in the day, in his address to the AIBI convention, Pandey said SEBI’s broader forward-looking agenda for capital markets, stressing that India’s next phase of growth will require patient capital for the deep-tech, biotechnology and clean energy sectors. He said the regulator’s priority will be to improve information accessibility and investor comprehension, while intervening firmly in cases of misrepresentation or regulatory breaches.
He said markets play an increasingly central role in funding economic expansion, with equity and debt mobilisation at elevated levels and a robust IPO pipeline still in place. SEBI, he said, has focused on faster processes and lower friction, citing measures such as shorter IPO listing timelines, quicker rights issues, eased listing norms for large issuers and a strengthened anchor investor framework.
At the same time, he flagged persistent disclosure gaps in offer documents, particularly around risk factors, valuation rationale and use of proceeds, placing the responsibility on merchant bankers to ensure rigorous, independent due diligence. Weak disclosures, he warned, not only undermine investor trust but also delay fund-raising through repeated regulatory queries.
On the debt side, Pandey said SEBI will continue efforts to deepen the corporate bond market, expand retail participation and improve liquidity, including through a pan-India awareness programme.
Published on January 15, 2026
