With innovator growth platform, Sebi eases startup listing norms

Proposed innovator growth platform will be part of the main exchange

Market regulator Securities and Exchange Board of India (Sebi) has recommended radical changes to make the existing institutional trading platform (ITP), which was introduced in 2015 to enable listings of new-age companies and startups.

In a consultation paper on Friday, Sebi has proposed to ease the eligibility criteria and also provide relaxations in other areas such as lower minimum application size and more discretion in share allocation to investors.

Sebi has also renamed the ITP as innovator growth platform (IGP). The regulator has said the IGP can be designated as the main board platform. Further, start-ups listing on IGP should get an option to trade under regular category on the main board after completion of one year of listing. At present, ITP companies are allowed to migrate to the main board only after three years of listing. Also, the ITP is part of the SME platform and not the main board.

Current rules don't allow a single entity to hold more than 25 per cent of the post-issue capital to be eligible to list on the ITP platform. Sebi has proposed to remove any cap on post-issue shareholding.

Sebi has also reduced the minimum application size for investors from Rs 1 million to just Rs 200,000.

Also, the minimum 75 per cent allocation to institutional investors criteria has been proposed to be removed. Sebi has said allocation can be made to any category of investors on a proportionate basis.

Further, Sebi has proposed to remove the rule that capped allotment to a single institutional investor at 10 per cent. Also, the minimum number of allottees has been reduced from 200 to just 50.

Also, shares allotted as ESOPs will be exempted from the six-month lock-in requirement applicable to entire pre-issue capital.

Sebi has invited the feedback from market participants by November 16.

The revamp comes after the ITP failed to gain much traction. In June, Sebi had constituted a group to look into issues and suggest changes to boost listings on this platform.

The group had representatives from the Indian Software Product Industry Round Table (iSPIRT), The Indus Entrepreneurs (TIE), the Indian Private Equity and Venture Capital Association (IVCA), law firms, merchant bankers, and stock exchanges.