BSE All Set to Allow Tech Startup Listing Under its SME Segment
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Soon after the Securities and Exchange Board of India (SEBI) said that it is going to set up a panel to review Institutional Trading Platform (ITP) framework to make startup listing an easy and attractive option, the Bombay Stock Exchange is now all set to launch a startup platform under its SME segment.
“In order to provide further incentives to the companies which are “Startups”, the Exchange is pleased to announce that “BSE Startup Platform” is enabled on BSE SME Segment,” the stock exchange said in a circular.
The platform will mostly focus on tech firms like IT, ITES, Bio-technology and Life Science, 3D Printing, Space technology, E-Commerce, Hi-Tech Defense, Drones, Nano Technologies, Artificial Intelligence, Big data, Enhance/Virtual Reality, E-gaming, Exoskeleton, Robotics, Holographic Technology, Genetic Engineering, Variable Computers Inside body computer technology and any other company dealing with modern technology. The BSE Startup Platform will be live from July 9.
Commenting on the development, Niranj Sangal, Group CEO, OMA Emirates Group, which recently acquired Indian PoS startup Mobiswipe, said "The BSE Platform for listing startups will definitively boost growth within the segment. It will be a growth driver. Currently, the industries are restricted. Thus if it is open to all it could further boost innovation."
The National Stock Exchange in 2013, launched Emerge-ITP for startups to list on the stock exchange with or without an IPO, however, the project failed to take off.
In 2015, SEBI had put in place the ITP framework to help startups list themselves at the stock market. But even this framework failed to gain any popularity.
This is why SEBI has formed a group with stakeholders like Indian Software Product Industry Round Table (iSPIRT), The Indus Entrepreneurs (TIE), the Indian Private Equity and Venture Capital Association (IVCA), law firms, merchant bankers, and stock exchanges to review its ITP framework.
According to media reports, the regulator is working hard to improve the startup ecosystem in the country. No wonder, earlier this year in March, SEBI gave a heads up and double the investment bracket to INR 10 crore of Angel Investors.
Soon after, the Income Tax Department declared that start-ups approved by an inter-ministerial panel are exempted from the Angel tax which is levied on companies issuing shares to investors above their fair value, treating it as income from other sources. Both the moves were cheered by the industry
Now, with watchdog reviewing its ITP guidelines and the stock exchanges relooking to attract startups, the stakeholders are crossing their fingers and are hoping a whole new level of a ball game for Indian startups, especially the ones operating in the tech space.
The Dos and Don’ts.
Meanwhile, if you are among the few, looking to invest your tech company on the BSE Startup Platform, then you have to fulfil the criteria which the stock exchange has issued in order to safeguard retail investors. The criteria are as follows:
1. The pre-issue paid up equity share capital of the company should be minimum of Rs. 1 crore.
2. The startup should be at least three years old.
3. It should preferably have investment by QIB or an Angel Investors for a minimum period of 2 years at the time of filing of draft prospectus with the stock exchange. Also, it should sum up to at least INR 1 crore
4. The startup should report a positive net-worth
5. The Company should not have been referred or should not have winding up petition against it with the National Company Law Tribunal (NCLT).