India, March 21 -- The Securities and Exchange Board of India (SEBI) has proposed allowing startup founders to hold employee stock options (ESOPs) even after the company goes public.

The markets regulator has proposed amendments to the ICDR (Issue of Capital and Disclosure Requirements) Regulations, 2018 and SBEB (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 for founders identified as promoters and sought public feedback.

Founders of new-age tech companies often see their stake getting diluted with each funding round, SEBI said in a consultation paper yesterday.

In order to keep founders incentivised over their diminished shareholding and avoid cash flow constraints, investors and startups often offer ESOPs to foun...