Paving the way for start-ups to list within India, capital markets regulator Sebi today relaxed norms for them to get listed and raise funds through a dedicated platform on domestic stock exchanges -- a move welcomed by e-commerce firms and other new-age ventures.
The new norms are aimed at encouraging Indian entrepreneurs and their technology and other start-ups to remain within the country, rather than moving to overseas markets for funds.
Under the new norms approved by Sebi's board today, the exchanges would have a separate institutional trading platform for listing of start-ups, while the minimum amount that an individual or institutional investor would need to invest in such ventures would be Rs 10 lakh. However, small retail individual investors would not be allowed to invest.
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A higher investment cap has been decided with a view to keep 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 the promoters and other pre-listing investors to six months, as against three years for other companies.
Besides, the disclosure requirements for these companies have also been relaxed, Sebi Chairman U K Sinha told reporters after the board meeting.
At least 25 per cent of their pre-issue capital would need to be with institutional investors for technology start-ups, while this requirement would be 50 per cent for companies from other areas.
Sinha said: "Indian start-up space is very vibrant and the country is ranked number five as far as start-ups are concerned. More than 3,500 start-ups are there in the country and a large number of M&As have also happened.
"However, most of these start ups are thinking of listing outside India because they felt the regulatory regime was not favourable to them. So, we have made this special provisions for them."
Sinha also said that Sebi is working on the new crowdfunding norms, which would provide another avenue to the new-age companies and entrepreneurs to raise funds and a decision in this regard can also be taken soon.
For share sale of start-ups, the number of allottees in case of a public offer should be at least 200.
The company would also have the option to move to the main platform of the stock exchanges after three years, subject to compliance with eligibility requirements.
