The Securities Markets Code, 2025 has been presented in Parliament and referred to a Parliamentary committee for its views. According to The Economic Times, India's capital markets are poised to become one of the top five globally, requiring a robust regulatory framework that enables ease, speed and simplicity in transaction execution. The Code aims to streamline the regulatory framework governing securities markets, which is essential in a market that is inherently highly regulated.
The proposed Code does not introduce sufficient innovation and does not adequately provide for new instruments or new types of transactions. As reported by The Economic Times, listing without an offering is not contemplated, despite companies sometimes not requiring fresh capital or existing shareholders not wishing to sell their holdings. This mechanism would improve governance, enhance liquidity and expand the market significantly.
There is a case for creating a trading platform for unlisted companies, as securities can currently be traded only after a company undertakes a public offering and lists. According to The Economic Times, there could be situations where a company requires limited trading access rather than full listing. A regulated platform for such trading would facilitate liquidity, enable transparent price discovery and broaden market participation, representing a practical idea that deserves consideration within the Code.
Electronic voting for shareholder meetings, while effective in principle, presents certain implementation challenges. As reported by The Economic Times, the authority given to portfolio managers to cast votes on behalf of multiple investors can lead to outcomes that may not fully reflect individual shareholder preferences. The Code presents an opportunity to review this mechanism to ensure voting outcomes remain fair, transparent and aligned with shareholder democracy principles.
The Code should formally recognise the Securities and Exchange Board of India (SEBI) as the sole regulator for listed companies. According to The Economic Times, listed companies currently interact with multiple authorities including SEBI, market infrastructure institutions, the Competition Commission of India, the Ministry of Corporate Affairs and the National Company Law Tribunal in certain cases. This multiplicity often leads to delays in corporate actions such as restructuring, mergers, demergers and minority squeeze outs, making it efficient to vest final approval for such matters with SEBI alone.
