Share Market Listing Of Indian Startups Becomes Easier With These New Rules
On Thursday, the Securities and Exchange Board of India (Sebi) revealed that they have eased eligibility and listing criteria on its Innovators Growth Platform (IGP).
What Is IGP?
Here IGP is a separate exchange venue for new-age startups which was Introduced in 2019 and yet to see any listing.
It is aimed at providing technology-oriented startups or companies with early-stage investors a listing opportunity with a much more relaxed framework compared to the mainboard.
What Has Changed?
Currently, if a company has to list on IGP then its 25 percent pre-issue capital needs to be held for at least two years by an institutional investor and other large investors.
But now, Sebi has eased this requirement to just one year.
Apart from that, up to 25 percent of pre-issue shareholding of ‘accredited investors, will be allowed for the above eligibility criteria.
Here ‘accredited investors’ is an individual investor with a net worth of Rs 5 crore.
Prior to this, a maximum of 10 percent of pre-issue holding of accredited investors’ was considered for the 25 percent pre-issue eligibility requirement.
In addition to this, Sebi has also allowed companies with superior voting rights to list on IGP.
Also, the open offer trigger for companies listed on this platform has been eased from 26 to 49 percent.
Apart from the above relaxation, Sebi has also eased the rules for companies to delist or to migrate to the main board such as NSE or BSE.
How Does This Help?
According to the experts, the latest relaxations by Sebi could help the IGP platform to take off.
Since “Several sweeping changes have been proposed for the IGP platform.
This should pave the way for easier fundraise by start-ups,” according to Rajesh Thakkar, Partner & Leader – Transaction Tax, BDO India.
Changes In Delisting Regulations
Apart from the easing criteria, the Sebi board has also tweaked the delisting regulations as now promoters will have to disclose their intentions to delist.
Additionally, the independent directors will have to guide the minority shareholders of a delisting-bound company by providing a reasoned recommendation on the delisting proposal.
Also, Sebi has made various timelines associated with delisting more efficient and provided some relaxation with regard to the reclassification of promoter shareholding.
There are also other changes that can be referred to from this article.