Sebi allows listing of start-ups and SMEs on Institutional Trading Platform

Stock market regulator Securities & Exchange Board of India (Sebi) today, 25 June 2013, said it has approved a proposal to amend the SEBI (ICDR) Regulations to permit listing of start-ups and SMEs in Institutional Trading platform (ITP) without having to make an IPO. Such companies eligible to be listed on ITP shall be accessible for investment to the informed investors only, Sebi said. Therefore, the minimum amount for trading or investment on the ITP will be Rs 10 lakh. These companies shall be exempted from the requirements of rule 19(2)(b) of SC(R)R 1957 under which companies have to offer up to 25% of its shareholding to public through an offer document in order to get listed. Therefore the listing can be done without an IPO and the expenses associated with it. While such companies are listed on the ITP they will not be permitted to raise capital though they can continue to make private placements.

Listing on ITP by start-ups and SMEs is expected to offer their existing investors better chances to find alternate buyers than if they search using their own network in the investment community. Standardized norms of entry for companies, eligibility criteria, continuous disclosure requirements, simplified exit rules and corporate governance norms will be prescribed, Sebi said in statement.

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