SEBI has clarified that privately negotiated sales of unlisted shares to identified non-Qualified Institutional Buyers (non-QIBs) are permitted under the Companies Act, provided they adhere to the 200-person limit.
SEBI Clarifies Sale of Unlisted Shares to Non-QIBs
The Securities and Exchange Board of India (SEBI) has issued a clarification concerning the private sale of unlisted shares to identified non-Qualified Institutional Buyers (non-QIBs). Such transactions are permitted under the Companies Act, provided that they remain within the prescribed limit of 200 identified individuals or entities.
This clarification aims to provide greater transparency and guidance on compliance for companies engaging in private placements. The stipulation that such sales must adhere to the 200-person limit reflects SEBI's commitment to regulating the unlisted securities market while still promoting access to investment opportunities.
Legal practitioners should take note of this regulation as it emphasizes the necessity for companies to remain compliant in their private sales. Understanding the limitations and obligations under the Companies Act is essential for proper legal navigation in this area of law.
This clarification allows practitioners to better guide clients who engage in or are considering the private sale of unlisted shares, ensuring they remain compliant with existing regulations while optimizing their investment strategies.
Citations
- SEBI (2026) SEBI Circular
