The Securities and Exchange Board of India (SEBI) on Tuesday relaxed the norms for technological start-ups to raise funds from the capital market, while easing the norms for issuance of Initial Public Offering (IPO) by companies.
The capital market regulator reduced the post-listing lock-in period for tech start-up promoters to six months, instead of three years for other IPOs.
“Exchanges will have a separate platform, Institutional Trading Platform (ITP), and would facilitate capital raising as well for start-ups,” said SEBI Chairman U.K. Sinha while addressing press conference here after its board meeting.
| 1 | Exchanges will have a separate platform for start-ups |
| 2 | Reduces post-listing lock-in period for tech start-up promoters to six months |
| 3 | Rationalises the framework for reclassification of promoters as public |
It also said that this platform is accessible to companies, which are intensive in their use of technology, information technology, intellectual property, data analytics, bio-technology, nano-technology to provide products, services or business platforms with substantial value addition and with at least 25 per cent of the pre-issue capital being held by QIBs (qualified institutional buyers), or any other company in which at least 50 per cent of the pre-issue capital is held by QIBs.
However, “no person (individually or collectively with persons acting in concert) in such a company shall hold 25 per cent or more of the post-issue share capital,” SEBI added.
It also shortened listing period of IPOs from 12 days to six days. “IPO process streamlined to reduce time period for listing of issues from 12 days to 6 days,” said Mr. Sinha.
“While reducing cost of public issues, issuers will have faster access to the capital raised and investors will have early liquidity,” said SEBI Chairman.
SEBI reduced the requirement of market capitalisation of public shareholding of the issuer for Fast Track Issues (FTI) from Rs.3,000 crore to Rs.1,000 crore in case of Follow on Public Offering (FPO) and to Rs.250 crore in case of Rights issue.
“This will help more listed companies to raise further capital using fast track route.”
SEBI has also announced measures to encourage greater retail participation in Offer for Sale (OFS) through stock exchange mechanism.
It also rationalised the framework for reclassification of promoters as public. SEBI said that the proposed framework will bring in consistency and also enable investors to take informed decisions based on any such move by the company/promoters.
While streamlining the process of IPOs, SEBI allowed Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) also to be allowed to accept application forms (both physical as well as online) and make bids on the stock exchange platform. This will be over and above the stock brokers and banks where such facilities are presently available. “This would substantially enhance the points for submission of applications.”
