SEBI unveils new regulations for easier listing of Indian startups on stock exchanges

The Securities and Exchange Board of India (SEBI) Thursday unveiled a new set of regulations to ease the listing process for Indian startups on the stock exchanges.

The SEBI Board meeting unveiled several measures around the Innovators Growth Platform (IGP) — the vehicle designed specifically for the listing of startups.

According to the market regulator, these measures have been done with an objective to make the platform more accessible to companies in view of the evolving startup ecosystem.

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The key proposals approved by the SEBI board include:

• Present eligibility requirement under IGP for the issuer to have 25 percent of pre-issue capital held by eligible investors for two years period is reduced to one year.

• The term ‘Accredited Investor’ for IGP is renamed ‘Innovators Growth Platform Investors.’ At present, the pre-issue shareholding of such investors for meeting eligibility, considered for only 10 percent, is now increased and shall be considered for the entire 25 percent required for meeting eligibility norms.

• The issuer company allowed to allocate up to 60 percent of the issue size on a discretionary basis, before issue opening, to eligible investors with a lock-in of 30 days on such shares.

• Issuer companies that have issued Superior Voting Rights (SR) equity shares to promoters/founders shall be allowed to do listing under the IGP framework.

• The stipulation regarding the trigger of open offer relaxed from the existing 25 percent to 49 percent.

• Presently for a company not satisfying the conditions of profitability, net assets, net worth, etc., migration from IGP to Main Board requires a company to have 75 percent of its capital held by QIBs as of the date of application for migration. This requirement is now reduced to 50 percent.

• Delisting under the IGP framework shall be considered successful if the post-offer acquirer/promoter shareholding, taken together with the shares tendered and accepted, reaches 75 percent of the total issued shares of that class; and at least 50 percent shares of the public shareholders are tendered and accepted.