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Sebi proposes relaxed norms for start-up listing

The Securities and Exchange Board of India (Sebi)

Year :- 1988

Chairman :-  Mr.Upendra Kumar Sinha

Objective :- Its main objective is to regulate the functions of securities market. SEBI promotes orderly and healthy development in the stock market.

SEBI is a body corporate having a separate legal existence and perpetual succession.

Recently  it was announced that  Sebi proposes relaxed norms for start-up listing

To encourage listing of startups, Sebi on 29th july 2016 proposes a relaxed norms for startup listing, this  framework will allows more investor categories, relaxed shareholding norms and reduced trading lot amount.

Sebi had mooted changes to the framework of Institutional Trading Platform (ITP), which has not seen much traction, though it was put in place in August 2015. SEBI To encourage listing of start-ups, the Securities and Exchange Board of India (Sebi) on Friday proposed an easier framework that allows more investor categories, relaxed shareholding norms and reduced trading lot amount.

SEBI Seeking to widen the eligibility ambit for getting listed on ITP

Rather than go abroad for raising funds, these rules were brought in to encourage Indian start-ups and entrepreneurs to remain within the country.

SEBI has proposed increasing the category of eligible investors when it comes to shareholding before the listing.

Besides QIBs (qualified institutional buyers), family trusts or systematically important non-banking financial companies (NBFCs) registered with the Reserve Bank of India, intermediaries registered with Sebi and category III FPIs (Foreign Portfolio Investors) would be considered, subject to certain conditions.

The net worth should be at least Rs 500 crore , in the case of family trusts, NBFCs and Sebi-registered intermediaries.

The regulator has suggested tweaking the share allocation limit in entities listed on ITP.

The proposal is to allow institutional and non-institutional investors to have a maximum of 50 per cent stake.

From a survey it is said that at present, 75 per cent of the net offer to public should be allocated to institutional investors and the remaining 25 per cent to non-institutional investors.

SEBI has proposed raising the ceiling to 25 per cent from the current 10 per cent level of the issue size. In case of discretionary share allotment to individual institutional investors.

SEBI also proposed  that no person, individually or collectively, should have more than 25 per cent of the listed entity’s post-issue capital.

As per the discussion paper, minimum trading lot is to be reduced to Rs 5 lakh from existing Rs 10 lakh while minimum lock-in period of six months for the entire pre-issue capital would be made applicable on all categories of shareholders.

According to Sebi’s definition, the startups that are allowed on this listing platform include those that are technology-intensive, focused on intellectual property, data analytics, biotechnology or nano-technology, and offer products, services or business platforms with substantial value

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