Sebi relaxes listing norms to boost start-ups

Markets regulator Securities and Exchange Board of India (Sebi) has proposed a new framework for start-ups, to encourage them to list on the domestic bourses.

The new framework is also being mooted to ensure that start-ups stay within the country to raise funds rather than go overseas, which is the trend currently. 

The changes include, new but easier norms for institutional investors, shareholders' pattern, trading lot, and pre-issue lock. 

The Institutional Trading Platform (ITP) was launched in August 2015 but has failed to garner much activity. In a bid to make it more attractive, Sebi's discussion paper on the subject proposes to rechristen it 'High-tech Start-up & other new businesses Platform'.

Sebi has also proposed that before listing of the issue, apart from QIBs (quantitative institutional buyers), family trusts and Non-Banking Financial Companies (NBFCs) would also be considered. However, these will be noted only if they are registered with the Reserve Bank of India (RBI), intermediaries registered with Sebi and category III FPIs (Foreign Portfolio Investors).

Apart from this, those entities that have a pooled investment fund with minimum assets under management of $150 million as well as those from a jurisdiction that is signatory to the International Organisation of Securities Commission's Multilateral Memorandum of Understanding would also be eligible, a PTI report dated July 29, said. 

The new framework also proposes changes to the shareholding pattern. According to the new plan, Sebi wants both institutional investors nad non-institutional investors to have maximum 50% stake. Currently, the norm mandates 75% allotment for institutional investors and the remaining 25% for non-institutional investors. 

For individual investors, Sebi wants to increase the allotment criteria from 10% to 25%.

Sebi also plans to reduce the minimum trading lot to Rs 5 lakh from the existing Rs 10 lakh with a minimum lock-in period of six months for the entire pre-issue capital applicable on all categories of shareholders.

The Sebi discussion paper will be open to comments from the public till August 14 and will be finalized after due diligence from other board members.