Sebi chief says, will consider changes in start-up listing norms

One suggestion is for doing away with the requirement of at least 25% of the pre-issue capital, which is an institutional investors for technology start-ups

As the capital markets gear up for more listings of start-ups, the chairman of the Securities and Exchange Board of India (Sebi) assured willingness to consider suggestions that could make fund raising easier for such companies.

U K Sinha, the chairman, emphasised their effort was to create a conducive climate for such entities, and to ensure these raised money domestically through the markets, rather than from places such as Singapore or America.

To attract new-age companies into the capital market, Sebi, in August, notified relaxed listing norms for such entities.

Participating at an event here on start-ups, organised by the PHD Chamber of Commerce and Industry, he said the regulator was willing to consider suggestions for possible changes in the listing norms.

Various market participants have suggested several changes to these norms. One is to do away with the requirement of at least 25 per cent of the pre-issue capital to be with institutional investors for information technology start-ups, while it is 50 per cent for companies from other areas.

Sinha said tax issues related to listing of start-ups would be taken up with the government. Business groups had sought a more tax-friendly environment for these.

Regarding small investors in start-ups, he said Sebi had to ensure a balance between their interest and the need to develop the markets.

The regulator has notified regulations for start-ups to list and raise funds through a dedicated platform on domestic stock exchanges, rather than going abroad. Under the new norms, the bourses would have a separate institutional trading platform for listing of start-ups from new-age sectors, including e-commerce entities, while the minimum investment requirement would be Rs 10 lakh.

"Start-ups by design are risky companies. There may be good returns but there can also be loss. This is not true only for India but all over world. So, we have by design provided to take small investors away from this market. When they (companies) go to the main board, everybody can participate. That is why we have kept a limit of Rs 10 lakh so far as investors are concerned into this market," explained Sinha.

For their listing, Sebi has relaxed the mandatory lock-in period for promoters and other pre-listing investors to six months, as against three years for other companies.