New policy for listing start-ups in 3-4 months

The Securities and Exchange Board of India (Sebi) is taking a number of steps to put in place a policy for start-ups and e-commerce companies to list in India. The markets regulator had held several meetings in Mumbai and Bengaluru in this regard, Sebi chief UK Sinha said on Friday.

“We want our companies to list in India rather than being forced to list abroad…In December, we had a meeting with 40-50 people in Bengaluru; we tried to understand their requirements….This was followed by a recent discussion with Sebi’s primary market advisory committee…I have invited them to Mumbai on March 27; we’ll have a discussion,” he said while speaking on the sidelines of a conference on real estate investment trusts, organised by Sebi.

Reportedly, many Indian start-ups and e-commerce companies, including Flipkart, are considering listing abroad. In a response to an earlier query by Business Standard, Flipkart, however, denied any such plan.

“It appears a certain set of rules will have to be carved out for them (start-ups and e-commerce companies) because they have a very specific business model….we’ll float a consultation paper and we hope in the next three-four months, we’ll have a policy in place. We want them to get listed here,” Sinha said.

On the Gujarat International Finance Tec-City (GIFT), Sinha said a number of regulatory issues were being addressed, Sinha said. “GIFT has been announced in the Budget and the timeframe has also been given, effective April 1. We’re in constant touch with RBI (Reserve bank of India). Sebi and RBI will come out with formulations before April 1,” he said, adding a number of issues were being resolved, including the jurisdiction and application of the Foreign Exchange Management Act (Fema). The Act places restrictions on foreign transactions involving foreign exchange as well as securities.

“There are challenges... How do you treat this territory? Is it an Indian territory or a foreign territory in technical terms? Will Fema be applicable or not? All those things are there. We’re in the (discussion) process. I’m not in a position to disclose the final outcome, except that it will be out by April 1,” he said.

REGULATORY AGENDA

LISTING OF START-UPS AND E-COMMERCE COMPANIES

• Sebi recently met with start-ups in Bengaluru
• Primary market advisory committee discussed issues they face
• Consultation paper soon, rules may be put in place in 3-4 months time

WOMEN DIRECTORS

• Regulations now require at least one woman on every company board
• Sebi says will take action if companies don't appoint them

IRONING OUT GIFT REGULATIONS

• Some problems related to jurisdiction, application of FEMA
• In discussions with RBI, should be ironed out by April 1

SEBI-FMC MERGER

• Only some procedural issues remaining
• Sebi has made some suggestions on the same to the government
• Working on smooth transition to new regulatory framework

The announced merger of the Forward Markets Commission with Sebi would be carried out soon, he said, adding Sebi had offered some procedural suggestions in this regard.

Sinha said action would be taken against companies that didn’t have even one women director on their boards, as required by recent regulations. “If people do not follow it willingly, it will have consequences. And, the consequences will be according to law; these could be very serious. I find it very shameful that in this country, 8,000-9,000 listed companies can’t find even one woman competent enough to be on their boards,” he said.