SEBI Considering Rework On The Listing Framework For Startups

As per recent reports, The Securities and Exchange Board of India (SEBI) is reworking its plans for a capital-raising platform targeted exclusively at startups.

SEBI is considering sweeping changes to the listing framework for tech-based startups that will allow them to trade publicly on regular stock exchanges.

Last year in June, SEBI unveiled a set of new rules to make it easier for startups to list on an alternative listing platform.

Both startups and bankers were concerned about the ability of Indian investors to judge the value of early-stage companies, and expressed worries about liquidity on the alternative trading platform. Taking note of the concerns, on 30th May, SEBI’s primary market advisory committee (PMAC) recommended to give up the idea of an alternative listing platform, a source close to the development told LiveMint. The source further added, “The regulator is keen to make the changes; however it wants to ensure that such dispensations would yield results. SEBI has been informed that the market could see four-six listings in six months if the regulations are amended accordingly.”

According to the minutes of the PMAC meeting, startups may be allowed to list on the main stock exchange for an initial period of three years.

However, for these three years, the Issue of Capital and Disclosure Requirements (ICDR), applicable to all listed companies, would not apply to the startups. Instead, startups will be required to comply with a diluted version of the listing guidelines. And at the end of the three-year-period, these companies would need to become compliant with the ICDR guidelines. As part of the proposed rules, SEBI may also dilute some of the norms, related to investors, in public share sales by startups.

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