Good News for Startups!

About the norm

By next month, regulator Sebi plans to relax listing norms for startups in order to aid them in raising funds. With this, startups can get an easier exit from their existing investors, angel, domestic and foreign as well as private equity players, who have poured heavy money in the tech market of India.

Under the new norms, startups can list on the separate Institutional Trading Platform (ITP) of stock exchanges like BSE and NSE. The minimum trading lot and the minimum application size have been kept at Rs 10 lakh so that only sophisticated and large investors come in. For their listing, Sebi had also relaxed the mandatory lock-in period for promoters and other pre-listing investors to six months, as against three years for other companies. Apart from it, the disclosure requirements for these companies have been relaxed. However, the companies can graduate to the main platform later and the small investors can also invest at that time.

Why did Sebi eased out the norms?

Sebi had drastically failed to bring startups for listing. Hence, it decided to tweak the regulations after taking advice from the industry and market players. By July, Sebi will announce the new changes in the board meeting.

Additional Information

U K Sinha is the Chairman of Sebi. Most of the companies that have got listed recently belong to the technology sector or are technology-driven businesses.

Takeaways :-

• By next month, regulator Sebi plans to relax listing norms for startups in order to aid them for raising funds.
• Under the new norms, startups can list on the separate Institutional Trading Platform (ITP) of stock exchanges like BSE and NSE.
• By July, Sebi will announce the new changes in the board meeting.

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