SEBI Relaxes Startup Listing Norms

SEBI proposes some reforms in the existing norms to ease the listing of start-ups in India and make the process more attractive

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India's start-up ecosystem is vigorous, wondrous and assiduous. Every day start-ups are emerging. Moreover, the start-up founders in India are as young as 17 or 18. There is a variety of founders in India. While some are studying in universities, others are graduates and there are even those who are in their mid-30s and experienced. While those who make it to the unicorn club are still very less, India's expansive startup ecosystem makes it one of the largest in the world.


Catering to the Indian Start-up Ecosystem

To support such an ever-widening and ever-expanding start-up community SEBI has proposed some alterations in the existing norms in order to ease the process of start-up listing on the market regulator of the country.

SEBI has proposed numerous changes. The renaming of Institutional Trading Platform(ITP) as 'Innovators Growth Platform'(IGP) is one. It is also notable that this change comes after ITP failed to garner any serious traction which the new change might promise to. IGP will now be the major board platform for start-ups. The proposal of reducing the minimum trading lot from current Rs. 10 lakh to Rs 2 Lakh is another reform in the pipeline.

The discussion paper released by SEBI on Friday said, "Considering that the framework failed to gain interest, SEBI came up with certain recommendations to make the platform more accessible…Lately, there has been a lot of activity in the start-up space in India and interest has been evinced with regard to listing on the ITP by various stakeholders and industry bodies."

Refurbishing the Process

The market regulating platform also proposed to do away with a minimum reservation of allocation to any specific category of investors. The allocation is to be done strictly on a proportionate basis. At present, 75 per cent of the net offer to the public should be allocated to institutional investors and the remaining 25 per cent to non-institutional investors. The requirement that a minimum number of 200 share allottees should be there in a start-up IPO is being reduced to 50 in the list of tentative changes.

These proposed changes and alterations will bring ease to the process of listing start-ups. It will also make the process more attractive, help start-ups to tap into markets and most essentially, lend support to these mushrooming businesses that are changing the face of the Indian business world to raise funds from India itself rather than looking for opportunities overseas.

It is therefore not wrong to say that this step by SEBI has come as a sigh of relief for start-ups as the government is recognising the potential of employment and revenue generation that lies within them.

The discussion paper is on the SEBI website till November 6 for public view and comments. The SEBI committee wants to take in the public opinion before finalising the norms.