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Market regulator Securities and Exchange Board of India (SEBI) is likely to come up with new guidelines to boost listing of start-ups in the main platform of the two major stock exchanges in India. The tweaked norms are likely to come into force in two months, according to highly placed sources in the start-up ecosystem.
The regulator has in recent months been engaging with various stakeholders, including start-ups, investors and industry bodies such as Nasscom and TiE to tweak the listing norms for start-ups.
Sources said SEBI is planning to allow start-ups to list on the SME (small and medium enterprises) platform of stock exchanges or on the main platform. Currently, start-ups can list on the Institutional Trading Platform set up in August 2015. But this has failed to attract even a single listing.
SEBI has made three attempts to help start-ups, mostly tech-driven or enabled, to tap public funds. After setting up the Institutional Trading Platform, the regulator had proposed changes in 2016, based on feedback from the start-up ecosystem. It renamed the ITP as High-tech Start-up and Other New Business Platform, but the effort did not strike a chord with start-ups.
TiE Mumbai’s President and Founder of IT firm Hexaware, Atul Nishar told BusinessLine , “A month ago, we initiated talks with SEBI along with other stakeholders. The regulator is working on some game-changing proposals. We expect the new norms to be in place in a couple of months.”
He added that while an IPO can help start-ups raise funds, it will also help retain talents, create trust and help in brand-building.
Start-ups are keen to tap the public market, but find the existing norms tough, he noted.
Major challenge
Sources in the start-up community said the challenges with regard to the listing norms were in terms of net worth requirements and profitability besides the promoter holding norm: the promoter has to bring down the promoter holding to 25 per cent.
These are the primary reasons why new-age companies have not been keen on listing on the ITP platform.
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