SEBI relaxes startup listing norms

In Uncategorized
June 24, 2015

The Securities & Exchange Board of India has announced relaxed listing norms on 23rd June 2015 . This will help aim at encouraging the startup industry to enter into the local market, and providing investor access.

Recent Amendments

The alternative listing platform would enable startups to raise capital and list in the country.
The regulator has done away with the promoter concept, eased lock-in requirements and diluted fund-usage disclosures under the liberalised norms.
Startups will be able to list on the alternative institutional trading platform.
The institutional trading platform (ITP) was launched to allow small and medium enterprises to list without an initial share sale.
Companies have been allowed to disclose just the broad objects of the issue and there is no cap on amount raised for general corporate purposes.
Sebi rules stipulate no more than 25% of the funds raised can be used for general corporate purposes. Besides, it has also allowed discretionary allotment of up to 10% of the issue size to institutional investors.
Sebi said the minimum application size as well as trading lot for such issues would be Rs 10 lakh. This high limit would ensure retail investors are kept out, particularly since the risks are high.
The e-IPO mechanism will halve the time taken for the process to six days.
The current method of applying for a public issue makes it difficult to reduce the 12-day period from issue closure to listing and trading of shares.
Sebi has also made the Application Supported by Blocked Amount (Asba) system mandatory for retail investors.
What is ASBA?
- Asba ensures the money needed to pay for shares will remain in the buyer’s account until these are allotted.
Sebi board also approved re-classification of promoters as public shareholders under certain circumstance. This includes the new promoter replacing the previous one following an open offer or any other business recast such as an M&A.