Sebi makes IPOs cheque-free; unveils start-up listing norms

Ushering in a wave of technology- driven reforms, regulator Sebi today allowed startups to list and raise funds with an easier set of norms within India, while it made investments cheque-free for all IPOs.
Besides, the regulator also fast-tracked the process of raising funds for companies through IPOs by reducing the listing time by half to six days after the public offer.
The Securities and Exchange Board of India (Sebi) also allowed a larger number of companies to tap the 'fast-track' route for raising funds from the existing and new investors.
While the move to create a separate institutional trading platform on stock exchanges for start-ups was cheered by e-commerce firms including Snapdeal and other interested players, the market experts also welcomed the reduction in listing time and expansion of ASBA facility for IPO investments that would do away with cheque payments.

ASBA (Application Supported by Blocked Amount) refers to an application mechanism for subscribing to IPO where the bid amount is blocked in a bank account and it would be now applicable to all kinds of investor category across all IPOs.
The new start-up listing norms are aimed at encouraging Indian entrepreneurs and their technology and other ventures to remain within the country, rather than moving to overseas markets for funds, Sebi Chairman U K Sinha said.

Under the new norms approved by Sebi's board today, the minimum amount that an investor would need to invest in such ventures would be Rs 10 lakh. However, small retail individual investors would not be allowed to invest.

A higher investment cap has been decided with a view to keeping small investors away, as risks could be higher in such investments and the disclosure and other listing requirements have been relaxed, as compared to other companies.
For their listing, Sebi has relaxed the mandatory lock-in period for all pre-listing investors to six months, as against three years for other companies. Besides, disclosure requirements for these companies have also been relaxed, Sinha told reporters after the board meeting.
The regulator said that the streamlining of public issue norms would "obviate the need to issue cheques", help more retail investors access IPOs and reduce the costs.

"With this issuers will have faster access to the capital raised and investors will have early liquidity," Sinha said.