SEBI reviews rules on use of IPO funds, related-party deals

"Good governance also requires that regulation remains proportionate and does not create unnecessary duplication," Pandey said. "The objective is to make regulation more efficient while preserving its purpose."

The regulator has already tightened the rules for disclosure of material events, with materiality thresholds and specified timelines. Pandey said the latest review is part of a broader effort to make regulation more efficient without weakening investor protection.

The review of issue proceeds utilisation comes as SEBI has stepped up enforcement against companies that misuse funds raised from public markets. In recent years, the regulator has penalised several firms for diverting IPO proceeds to unrelated activities or failing to disclose the use of funds in a timely manner, enforcement data shows.

The clarification on related-party transactions is particularly relevant for companies with complex group structures, where deals between entities can be opaque. Pandey said the goal is to make the disclosure framework more effective, not just to increase the volume of information.

For companies, clearer rules on issue proceeds and related-party transactions could reduce ambiguity and compliance costs. For investors, better quality and timeliness of disclosures would make it easier to track how their money is being used.

Pandey did not set a deadline for public comments or a timeline for implementing the changes. SEBI typically releases a consultation paper before finalising any rule amendments. No date has been announced for a public comment period.