| Start- up listing: Sebi may further relax proposals |
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New Delhi/ Mumbai, 27 May To provide the country's ₹ 1.3 lakh crore start- up sector a serious go at listing, the Securities and Exchange Board of India ( Sebi) might further relax the proposed framework in this regard. According to sources, the capital markets regulator could considerably bring down the entry barrier for investor and also dilute the disclosure requirement for companies wanting to list on the soon- tobeintroduced listing and trading platform. Sebi is reportedly planning to set the minimum application size at ₹ 5 lakh, half of what it had proposed in the discussion paper titled ' Alternate capital raising platform', issued in March ( with comments invited till April 20). Additionally, the minimum trading lot size could be reduced to ₹ 3 lakh from the proposed ₹ 5 lakh. The disclosure requirement would not require startups to disclose objects of an issue if the money was raised for commercial purposes. The basis of the issue price would require disclosures as deemed fit by the issuer, and disclosure of litigation depending on its relevance. "The regulator has collected and analysed all the public accepted by the board. The regulations are likely to be cleared in the next board meeting, slated for end- June," said a source close to the developments. These aspects were deliberated upon in the recent meeting of Sebis Primary Market Advisory Committee. Sebi had, on the lines of The Jumpstart Our Business Startups Act or JOBS Act in the US, proposed a separate platform for listing of start- ups, with an easier regulatory framework. The latter, however, was to be only for seasoned institutional investors. Retail or small investors were to be kept out "The ₹ 10 lakh application size and ₹ 5 lakh trading lot was set to keep retail investors from investing in these issues. However, as the retail investor generally is not categorised by investment of more than ₹ 2 lakh we are mulling to reduce the two," said a source. Sebi had already prescribed alenient disclosure regime in the discussion paper and this could be tweaked further, sources indicated. For instance, acompany planning to list on the start- up platform might not have to carry the fund raising disclaimer in its advertisements. A company listing on inform the public that Sharad Sharma, co- founder, The discussion paper had at six months. This essentially, the lock- in requirement is to safeguard the lenders by ensuring the promoters don't run away after listing. If you look at any of the new- age tech companies, there is hardly any debt on their books. Also, they are professionally managed and most of the promoter equity is sweat equity. Therefore, it doesn't make any sense to treat them as your typical promoters and subject them to a lock- in period after listing." Tech companies account for less than 15 per cent of the Indian capital market compared to 40 per cent in the US. Could halve minimum investment size from what was proposed in March paper, plus other concessions; to approve framework next month |
New secretarial standards put additional compliance burden on companies source Moneylife
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