Investors’ lock-in period reduced while listing and disclosure norms are made easy
GN Bureau | June 24, 2015
In next five years India is going have 11,500 start-ups with over two lakhs skilled staff, and recognizing the tremendous growth, the country’s capital markets regulator has opened up investment avenues for this sector.
The Securities and Exchange Board of India (Sebi) announced after a Tuesday board meeting a slew of measures to make it easier for start-ups to raise funds and list in India. The start-ups face issues of funding and listing norms and the Sebi has revised exit options like lock-in period which will bring in liquidity into the system.
“We have got a feedback that most start-ups think of overseas market when it comes to listing. They felt that the regulatory regime for listing of start-ups was not favourable in India. So, we have decided to make it easier,” said UK Sinha, chairman of Sebi.
“Sebi is giving a lot of freedom in terms of pricing, disclosures and usage of funds to start-ups willing to get listed on this platform. Also disclosures in terms of litigations will be decided by the board according to materiality of the litigation,” Sinha said.
These are new measures for the start-ups:
Now, hi-tech start-ups in areas such as analytics and biotech can list in India on the institutional trading platform (ITP) of exchanges, if at least 25% of their pre-issue capital is held by qualified institutional buyers (QIBs), such as private equity and venture capital firms and non-banking financial companies.
Other start-ups can also opt to get listed on the platform, provided at least 50% of their pre-issue capital is held by QIBs. To pump in more funds it has also broadened the definition of QIBs to include non-banking financial companies and family offices or trusts and other entities that register themselves as alternative investment funds.
For start-ups willing to list on this platform, there will be no cap on the usage of public issue proceeds for general corporate purposes. Traditionally, not more than 25% of the capital raised can be used for general corporate purposes.
In the case of start-ups, the lock-in period will be only six months for all categories of pre-IPO shareholders as against existing rules that mandates a lock-in period of three years for (pre-IPO) shareholders holding more than 20% and one year for all other investors.
On the special listing platform for start-ups, 75% of the shares will be reserved for such institutional investors. The remaining 25% will be available for non-institutional investors.
No person (individually or collectively with people acting in concert) in such a company will be allowed to hold more than 25% of the post-issue share capital in a start-up, it added.
The start-ups get liberal terms of disclosure requirements. Companies intending to list on the proposed platform will be required to file draft offer documents with Sebi for observations with broad objectives of a public issue rather than details that are required of regular primary issuances.
The new norms for start-ups will come into effect after a gazette notification, which is likely to be put out in the next six weeks.
Department of Economic Affairs (DEA) and National Buildings Construction Corporation Ltd (NBCC) have signed an agreement for the construction of housing project for Indian Economic Service (IES) officers. For this, the urban development ministry has allotted 3,519 square metre of land on Dee
The foundation stone for the integrated office complex of director general of civil aviation (DGCA), bureau of civil aviation security (BCAS), airports economic regulatory authority of India (AERA), aircraft accident investigation bureau (AAIB) and airports authority of India (AAI) was laid by civil aviati
Civil society has paid rich tributes to Neelabh Mishra, veteran journalist and human rights activist, who died in Chennai Saturday after a prolonged battle with liver failure. The National Alliance of People`s Movements (NAPM) said it was deeply saddened to know of the untimely demise of its
It seems the process of procuring H-1B visas may get more difficult for the Indian IT companies with the new policy announcement by the US president Donald Trump. The new policy may hit the third party supplier base of the Indian IT firms in the US, the biggest users of H-1B visas. Moreover, now the H-1B m
Most of us would recall how sorely we needed a guide, a mentor, when we were in our twenties and starting out in a career, or in the deeper study of a branch of k
India is the fifth largest producer of e-waste in the world and has discarded approximately 18 lakh metric tonnes of e-waste in 2016, which is 12 percent of the global e-waste, according to a United Nations University study, ‘The Global E-Waste Monitor 2017’. In fact by 2020, India’s e-wa