Sebi mulls norms for startups to shift to main board

To help startups to move from the Innovators Growth Platform of stock exchanges to the mainboard for regular trading, regulator Sebi is planning a new set of norms to allow them to shift after one year of trading and expanding their shareholder base to at least 200.

However, the regulator is of the view that if companies listed on the IGP are allowed to be traded in the regular category of mainboard without following stringent criteria, it may be misused to bypass the rigorous route of coming up with a mainboard IPO, officials said.

Any company desirous of getting listed on the main board of stock exchange for regular trading of their shares need to follow stringent disclosure and eligibility norms and launch an initial public offer (IPO). But, the rules are much more relaxed for the startups looking to list their shares on the new IGP, where trading activities are relatively restricted.

A detailed set of norms were finalised by Sebi’s board in December 2018 and the regulator was asked at that time to decide on the requirements of migration of trading of shares from IGP to the mainboard in consultation with stock exchanges and other stakeholders.

Officials said Sebi discussed these norms with its own Primary Market Advisory Committee as well as the two leading bourses BSE and NSE, pursuant to which a discussion paper was issued for public comments in May this year.

After taking into account comments received from merchant bankers, industry bodies, stock exchanges and others, Sebi has now finalised a detailed set of draft norms which would be presented for its board’s approval later this month.

As per the proposal, a company would need to be listed on the IGP for at least one year for migration and have at least 200 shareholders at the time of migration.

Besides, the company or any of its promoters and directors should not have been barred from accessing the capital market. They should also not have been classified as wilful defaulters or fugitive economic offenders. Officials said some suggestions were received that the minimum number of shareholders for migration should be reduced to 50 or 100, as startups do not have a large investor base and a lower threshold in the initial phase would help the platform attract more companies.

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