Sebi plans to relax, rename listing norms for startps

In a major push to kickstart listing of start-ups in India in a big way, capital markets regulator Sebi has lined up a slew of relaxations for new-age ventures in sectors like ecommerce, data analytics and bio-technology to raise funds and get their shares traded on stock exchanges.

The proposed changes, likely to be discussed at Sebi’s (Securities and Exchange Board of India) board meeting this week, also include renaming the ‘Institutional Trading Platform’ that the regulator had created for such listings as ‘Innovators Growth Platform’.

The relaxation in the norms follows tepid market interest to the existing platform and demands from various stakeholders to make the norms easier and the platform more accessible in the wake of expanding activities in the Indian startup space.

While there has been a growing interest among the startups to get listed, their intention has failed to convert into actual listing in a big way and many of them have cited difficulties in meeting the compliance requirements.

To review the startup platform, the Sebi had set up in June this year an expert group that included representatives from the the Indian Software Product Industry Round Table, the Indus Entrepreneurs, the Indian Private Equity and Venture Capital Association, law firms, merchant bankers and stock exchanges.

The group also held extensive consultations with other stakeholders including start-ups, investors, bankers and wealth management firms and subsequently submitted its report to Sebi, which later floated a public consultation paper on the proposed changes. The proposed changes include doing away with the requirement of at least 50% of pre-issue capital being held by qualified institutional investors.

It has been proposed that 25% of pre-issue capital for at least two years should be with qualified institutional investors, a family trust with networth of at least Rs 500 crore, well-regulated foreign investors and a new class of ‘accredited investors’.

The AIs can be an individual with a total gross income of Rs 50 lakh per annum and minimum liquid networth of Rs 5 crore, or any body corporate with a net worth of Rs 25 crore, and they can hold up to 10% stake before listing. Sebi has also agreed to consider further relaxations going further. It has also agreed to do away with a cap of 25% holding for any person, individually or collectively with persons acting in covert, in the company’s post-issue capital.

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