SEBI plans to relax start-up listing norms by next month

Regulator Sebi plans to make start-up listing platforms more attractive by relaxing the norms by next month. This is to help start-ups tap this avenue for raising funds as also to give existing local and foreign investors an easier exit opportunity.

The platform is aimed at providing easier exit options for angel investors, domestic and foreign venture capital funds and private equity players, who have invested in over 3,000 start-ups, including in new technology space, in India.

Sebi decided to tweak the regulations to make them more attractive after incorporating some fresh suggestions from the industry and market players as the platform has failed to attract a single start-up for listing so far. Sebi’s board is likely to discuss the fresh changes in its board meeting next month.

Sebi Chairman UK Sinha, who is visiting the US including Silicon Valley to hard-sell the Indian growth story among the investors there, had said in a recent interaction that the regulations are being looked into again.

“What we have noticed is that most of the companies that have got listed in past year or so are in new technology sectors or are technology-driven businesses. This gives us an idea about the direction in which our economy is moving,” Sinha said.

The Institutional Trading Platform (ITP) is yet to see any start-up listing ever since an easier set of compliance and disclosure requirements was notified in August 2015.

Under the rules, start-ups can list on the separate ITP of stock exchanges such as BSE and NSE.

Diluting the rules

“Not single company has been listed on this so far, although we formulated the rules after detailed consultation with the industry and market players. We are again looking at revising the norms as there have been some fresh suggestions from the industry,” he said.

On whether some changes are in offing in start-up listing regulations, Sinha had replied in affirmative.

“Yes, we have received some suggestions that we will study and incorporate them appropriately.” Asked about the timeframe, he said, Sebi may take up the matter in its next board meeting in July.

Under the notified rule, minimum trading lot and the minimum application size have been kept at ₹10 lakh so that only sophisticated and large investors come in.

For their listing, Sebi had also relaxed the mandatory lock-in period for promoters and other pre-listing investors to six months, as against three years for other companies. Besides, the disclosure requirements for these companies have been relaxed. The companies can, however, graduate to the main platform later and the small investors can also invest at that time.

COMMENT NOW