The Securities and Exchange Board of India (SEBI) clarified on July 31, 2026 [2], that off-market sales of unlisted equity shares to up to 200 buyers [1] are not public issues.

This ruling provides critical regulatory certainty for institutional investors and banks seeking to liquidate unlisted holdings without triggering the stringent disclosure and filing requirements associated with a public offering.

The clarification follows a request for guidance from IDBI Bank, which approached the regulator in May 2026 [3]. SEBI said that such transactions are secondary transfers conducted by existing shareholders rather than offers made by the company itself.

"The off-market sale of unlisted equity shares by an existing shareholder through private negotiations will not be treated as a deemed public issue," a SEBI spokesperson said [1].

Under the current interpretation, the sale of these shares does not constitute an invitation by the company to the public. Because the transaction occurs between a shareholder and a private buyer, it is classified as a secondary transfer [2].

"Sale of unlisted equity shares are secondary transfers by an existing shareholder and do not constitute an offer or invitation by the company," a SEBI spokesperson said [2].

By setting the limit at 200 private buyers [1], the regulator maintains a boundary between private liquidity events and broad market distributions. This distinction allows entities like IDBI Bank to manage their portfolios through private negotiations without the legal complexities of a formal public issue.

“The off-market sale of unlisted equity shares by an existing shareholder through private negotiations will not be treated as a deemed public issue.”

This clarification reduces the regulatory burden for financial institutions holding unlisted equity. By confirming that secondary transfers to a limited group of private buyers are not 'deemed public issues,' SEBI allows for greater liquidity in unlisted shares while preventing companies from bypassing public offering rules through large-scale private sales.