The markets regulator has proposed a slew of changes to the current framework, to make it easier and more attractive for Indian start ups to list on the bourses.
Boosting start-ups and entrepreneurship is one of the several focus points for the Narendra Modi-led government. With a Rs 10,000 corpus allocated to new businesses and entrepreneurs, and a slew of changes to doing-business and taxation norms, it seems like the government has the back of start-ups in India.
Now, markets regulator Securities and Exchange Board of India has proposed an easier framework to ensure that start-ups in India look to the domestic market when they want to raise money, and don't to overseas, as it happens right now.
Apart from this, Sebi also wants to restructure the Institutional Trading Platform (ITP) which was launched last year but has failed to gain much traction, to attract start-ups to list.
For this, a Sebi discussion paper proposes an easier framework to allow more investor categories, relaxed shareholding norms and a smaller trading lot.
1) More investor categories
Apart from Qualified Institutional Buyers (QIBs), family trusts or systematically important NBFCs registered with the Reserve Bank of India, intermediaries registered with Sebi and category III FPIs (Foreign Portfolio Investors) should be considered, subject to certain conditions.
In the case of family trusts, NBFCs and Sebi-registered intermediaries, the net worth should be at least Rs 500 crore.
Entities such as those having a pooled investment fund with minimum assets under management of $150 million as well as those from a jurisdiction that is signatory to the International Organisation of Securities Commission's Multilateral Memorandum of Understanding would also be eligible, a PTI report said.
2) Shareholding pattern
Sebi has proposed to allow institutional and non-institutional investors to have a maximum of 50% stake in the company.
Currently, institutional investors are allotted 75% of the net offer to public and non-institutional investors are allotted the remaining 25%.
For discretionary share allotment to individual institutional investors, Sebi wants to raise the ceiling to 25% from the current 10% level of the issue size.
The discussion paper also calls for eliminating the clause which proposes that no person, individually or collectively, should hold more than 25% of the listed entity's post-issue capital
3) Minimum trading lot
Sebi wants the minimum trading lot to be brought down to Rs 5 lakh from the existing Rs 10 lakh with a minimum lock-in period of six months for the entire pre-issue capital would be made applicable on all categories of shareholders.
4) Renaming ITP
Sebi also wants to rename ITP to 'High-tech Start-up & other new business Platform'.
The discussion paper would be open to public for comments till August 14.
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