India’s market regulator, the Securities and Exchange Board of India (SEBI), is considering whether it should start regulating the country’s unlisted share market, which currently operates largely outside its direct control, chairperson Tuhin Kanta Pandey said. 

Speaking on the sidelines of the Association of Investment Bankers of India’s annual convention for 2025–26 here, Pandey said the issue is being discussed with the Ministry of Corporate Affairs.

“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 explained.

The unlisted share market includes shares of companies that are not traded on stock exchanges.

Investors usually buy these shares through private deals, employee stock option plans or intermediaries.

Since these companies are not listed, they are not required to follow strict and continuous disclosure rules, which often leaves investors with limited or delayed information about a company’s financial health and business risks.

Pandey said one of Sebi’s main concerns is the large difference between prices in the unlisted market and the valuations that emerge when companies come out with an initial public offering.

“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 stated.

He also clarified that rules followed by listed companies cannot be directly applied to unlisted firms.

Traditionally, SEBI’s regulatory role begins only when a company prepares to list its shares.

On the National Stock Exchange’s proposed IPO, Pandey said the market regulator is currently reviewing the exchange’s settlement application.

He added that, in principle, SEBI agrees with the settlement and the matter is being examined by different committees.