Sebi relaxes listing, fundraising norms for startups

The Securities and Exchange Board of India (Sebi), which met in Mumbai on Tuesday, announced relaxed regulations for listing and raising of funds through a dedicated platform on domestic stock exchanges, as an option to raising funds overseas.

Under the new norms approved by Sebi's board, the stock exchanges would have a separate institutional trading platform for listing of start-ups from the emerging sectors, including e-commerce, while the minimum investment requirement would be Rs10 lakh.

Initial public offer (IPO) process has been streamlined to reduce time period for listing of issues from T+12 days to T+6 days, increase reach of retail investors to access the IPO and reduce the cost of public issues. With this issuers will have faster access to the capital raised and investors will have early liquidity, Sebi said in a release.

Sebi has also simplified the framework for capital raising by technological start-ups and other companies and approved the enabling provisions for capital raising by technological start-ups and other companies through Institutional Trading Platform.

For their listing, Sebi has relaxed the mandatory lock-in period for the promoters and other pre-listing investors to six months, as against three years for other companies.

Besides, disclosure requirements for these companies have also been relaxed, Sebi chairman UK Sinha told reporters after the board meeting.
 
At least 25 per cent of their pre-issue capital would need to be with institutional investors for technology start-ups, while this requirement would be 50 per cent for companies from other areas.

Sinha said "Indian startup space is very vibrant and the country is ranked number five as far as start-ups are concerned. More than 3,100 start-ups are there in the country and a large number of M&As have also happened."

"However, most of these start-ups were thinking of listing outside ... We have made a very special provision for start-ups," he added.

The board also reduced the requirement of market capitalisation of public shareholding of the issuer for Fast Track Issues (FTI) to Rs1,000 crore in case of follow-on public offer (FPO) and Rs250 crore in case of rights issue. This will help more listed companies to raise further capital using fast track route.

It also proposed changes in the offer for sale (OFS) through stock exchange mechanism to encourage greater retail participation in OFS.

A rationalised, simple framework has been put in place for reclassification of promoters as public. The proposed framework will bring in consistency and also enable investors to take informed decisions based on any such move by the company / promoters.