To ease out the existing process of going IPO for startups, the Securities and Exchange Board of India (SEBI) has proposed to remove some of the startup listing norms for making the ecosystem more attractive. SEBI already has released a discussion paper on its website for public comments by November 16.
The regulator has also renamed the Institutional Trading Platform (ITP) as ‘Innovators Growth Platform (IGP). It’s worth noting that SEBI had introduced ITPin 2015.
According to SEBI proposal, IGP would be designated as the main board platform for startups with an option to trade under regular category after completion of one year of listing. The existing rule allows migration of main board after three years of listing date.
The proposal also reduces the minimum trading lot size to Rs 2 lakh from Rs 10 lakh with a lock-in period of 6 months for all categories of pre-IPO public shareholders.
While the existing ITP platform allowed a minimum number of allottees to 200, the fresh proposal will cap it to 50.
Earlier in July this year, SEBI was planning to introduce SnapChat kind of IPO model for startups in India. It also appointed a committee to discuss the proposal of allowing companies to sell shares with different voting rights.
This essentially aimed to enable startup founders to retain control in the company even after selling shares at various stages and avoid greater shareholder scrutiny even after the listing.
For the past three and half years, Sebi has updated its rules multiple times to support the growth of startups. In April 2018, the SEBI set up a group of industry experts to examine the possibility of letting local companies directly list their shares overseas.
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