The Securities and Exchange Board of India (SEBI) has introduced new restrictions on cross-holdings among publicly listed companies, as part of its broader efforts to promote transparency, prevent concentration of control, and safeguard minority shareholder interests. The circular, notified in October 2025, places limits on the extent to which one listed company can hold equity in another listed entity, especially when both companies are part of the same promoter group or corporate conglomerate. This reform is targeted at curbing circular ownership structures that obscure beneficial ownership and can be used to manipulate governance and financial reporting.

Under the revised rules, a listed company may not acquire more than 10% of the paid-up equity capital of another listed company in the same group, unless it receives prior approval from SEBI and a majority of disinterested public shareholders through a special resolution. Furthermore, companies with existing cross-holdings beyond this limit will be required to divest excess holdings within 24 months, unless exempted under specific conditions such as strategic investments or financial subsidiaries. The rules also prohibit the use of cross-holdings to qualify for promoter reclassification or escape open offer obligations, thereby reinforcing investor protections.

SEBI has directed all listed entities to disclose cross-holding structures, including indirect and layered investments, in their quarterly filings and corporate governance reports. Companies must also obtain independent valuation reports before executing any cross-holding transactions and ensure board-level oversight of such deals. Analysts believe this regulatory shift will help improve market transparency, prevent corporate opacity, and reduce undue influence in board decisions, especially in sectors dominated by family-run conglomerates or business groups with overlapping ownership. The measure is expected to be a key step toward enhancing investor confidence in India’s capital markets.