SEBI comes out with the proposal of relaxed norms for startup listing

New Delhi, Oct 27 (KNN) Securities market regulator, the Securities and Exchange Board of India (SEBI) has come out with the more relaxed series of proposals for startups with an aim to make listing on bourses more attractive for them.

In this regard, market regulator proposed to remove the cap on holding for investors in startups post-listing.

Further, it has come out with the proposal of reducing the minimum investor application size, removing reservation norms for various classes of investors in start-up listing issues.

Besides, it also proposed to relax the minimum required number of allottees in start-up listing, relax the share lock-in norms post-listing, relax the minimum trading lot-size required for startups post listing, and broaden the definition of start-ups and eligible investors to allow all classes of investors to support start-up growth in the country.

Entities with the pooled investment fund with minimum assets under management of $150 million and those from a jurisdiction that is signatory to the international organization of securities commission's multilateral MoU should qualify for holding 25 percent of the pre-issue capital, SEBI proposed.

At present, neither the promoter nor any other entity is eligible to hold more than 25% in a start-up after its initial public offering (IPO).

In a discussion paper, minimum application size for investing in a start-up IPO has been proposed to be reduced from Rs10 lakh to Rs 2 lakh.

The minimum trading lot in shares of a listed start-up, which is required to be Rs 10 lakh, has now been proposed by SEBI to be reduced to Rs 2 lakh and in multiples thereof.

For specific class of investors, the panel proposed that there should be no minimum reservation of allocation to any specific class of investors.

At present, in a start-up IPO, 75% of the net offer has to be allocated to institutional investors and the remaining 25% can be allocated to other investors.

The minimum number of share allottees in a start-up IPO too has been proposed to be reduced from 200 to 50.

Issuing the draft papers, the regulator proposed to rename the institutional trading platform as "Innovators Growth Platform" (IGP).

The panel has suggested equitable share lock-in rules in start-ups before their listing on exchanges. It has suggested that the lock-in of 6 months should apply uniformly to all classes of pre-IPO public shareholders.

The above recommendations have been made with an objective to make the platform more accessible. In this regard Sebi has sought public comments on the proposal by 16 November.