Startup listing norms to be simplified

To make listing on bourses more attractive for startups, markets regulator Sebi came out with new set of proposals that would allow more investor categories, relax shareholding norms and reduce trading lot amount.

In this regard, Sebi has mooted changes to the framework of Institutional Trading Platform (ITP), which has not seen much traction even though it was put in place in August 2015.

Since the framework failed to evince interest, Sebi came up with certain recommendations through a discussion paper in July 2016 to make the platform more accessible. Also, considering the lukewarm response in the platform, no amendments to the norms were made. 

However, lately, there has been a lot of activity in the startup space in India and interest has been evinced with regard to listing on ITP by various stakeholders and industry bodies, according to Sebi. In view of this trend, the regulator constituted a group in June 2018 to review the ITP framework and identify the areas which require further changes. 

Issuing the draft papers, the regulator has proposed to rename the Institutional Trading Platform (ITP) as Innovators Growth Platform (IGP). In order to be eligible for listing on ITP, Sebi has proposed increasing the category of eligible investors when it comes to shareholding before the listing.

It has proposed that 25 per cent of the pre-issue capital should be held by Qualified Institutional Buyers (QIBs) or other regulated entities or accredited investors (AIs) for at least two years. Out of this, not more than 10 per cent should be held by AIs. Besides, QIBs, family trust with net-worth of more than Rs 500 crore, category III FPIs (Foreign Portfolio Investors) should be made eligible. 

Sebi also proposed that entities such as those having a pooled investment fund with minimum assets under management of $150 million and those from a jurisdiction that is signatory to the International Organisation of Securities Commission's Multilateral MoU should qualify for holding 25 per cent of the pre-issue capital.