SEBI To Release Startup Listing Guidelines By January 20

As many as 15 tech startups are reportedly planning to go public after the Securities and Exchange Bureau of India (SEBI) relaxed its norms for startup listing on the Indian stock exchanges including BSE and NSE.

These startups have reportedly sought guidance from global non-profit organisation The IndUS Entrepreneurs (TiE), Mumbai chapter to help them complete the process.

Atul Nishar who serves as the president of TiE Mumbai had said that it will reveal the names of the startups after the final guidelines are announced.

According to reports, the market regulator is expected to issue the finalised and detailed guidelines on January 20. Following this, the startups will begin their listing process.

Further, over a dozen tech startups are expected to go public in fiscal 2020, added the report.

New Changes To Be Introduced By SEBI

Earlier in October, the regulatory body had proposed the changes in its ‘Institutional Trading Platform’ (ITP) after it failed to help the ecosystem because of adverse rules and regulations.

Among the changes, SEBI renamed ITP to ‘Innovators Growth Platform’ to promote the growth of the Indian startup ecosystem.

According to reports, the proposals by SEBI include :

• The minimum trading lot has been reduced from $14.2K (INR 10 Lakh) to  $2.8K (INR 2 Lakh)
• About  25% of pre-issue capital for at least two years should be with qualified institutional investors
• A family trust with a net worth of at least $71.4 Mn (INR 500 Cr), well-regulated foreign investors, and a new class of ‘accredited investors’
• The ‘Authorised Investors’ can be an individual with a total gross income of $71.3K (INR 50 lakh) per annum and minimum liquid net worth of $7 Mn (INR 5 Cr).
• Removing the cap of 25% holding for any person, individually or collectively with persons acting in covert, in the company’s post-issue capital. This move will ensure that investors are allowed to invest more than 25% in a startup
• It also proposed $1.4 Mn (INR 10 Cr) as minimum net offer size to public

SEBI’s Initiatives To Boost Indian Startup Ecosystem

SEBI had been in talks with the National Stock Exchange (NSE) since earlier this year, discussing the changes needed to be included in the Emerge ITP platform to help the startups scale up.

Apart from tweaking the listing norms to help startups hold onto their equity stake, SEBI is also in talks with stock exchange regulators Bombay Stock Exchange (BSE) for launching a startup platform to help the listing process by tech startups working across sectors such as IT, ITES, biotech, 3D printing, spacetech, and ecommerce among others.

Earlier in June, SEBI had also set up a panel in order to find ways to make the listing process attractive for startups.

These initiatives by SEBI is aimed at helping the Indian startups look to IPO as an alternative for the VC funding. With this, the startups can ensure that the founders can maintain control of the majority of the equity stake rather than the investors.

This will help the founders voice their powers regarding the future decisions related to the company.

[The development was reported by Hindu Business Line]