Sebi proposes easier norms for start-up IPOs but you may not get to invest

The Securities and Exchange Board of India yesterday released a discussion paper on listing norms start-ups, which will help entrepreneurs raise funds from within the country.

The capital market regulator has proposed a an 'Alternate Capital Raising Platform', which will allow start-ups to raise funding from institutions and high net worth individuals from the capital markets. Due to the risks involved, retail investors will not be allowed to invest in such companies.

"Capital raising shall be allowed on the ITP (institutional trading platform) with certain modifications in the current regulatory framework that may include relaxation on restriction of fund raising, minimum investment from certain category of investors, etc," the paper said.

The paper also calls for adequate disclosures but without hampering the capital raising potential of such companies.

 Sebi proposes easier norms for start-up IPOs but you may not get to invest

Image: IBNLive

Earlier in the day SEBI Chairman U K Sinha said at the sixth Capital Markets Summit organised by CII that the regulator it will finalise norms for start-ups by June which will incentivise them to list within the country.

“SEBI plans to come out with the discussion paper and set to come out with the regulations for start-up companies by June to allow such companies to list within the country. Many new technology companies have several issues and are exploring overseas listing,” Sinha said.

“We need to carve out certain set of rules. We may provide them relaxation in profitability and objects of the issues as these companies work on specific business model,” he said.

On the primary market, Sinha said that in spite of the formation of new government and a great budget, it continues to be subdued. In the 11 months of FY’15, only Rs. 1,500 crore has been raised and the pipeline is not strong at the moment, he added.

When the country is projected to grow at 7 percent and foreign portfolio investment touched record $46-billion mark, why primary market is subdued, he asked, seeking suggestions from industry to revive it.

However, the retail investors have started returning to the market as lakhs of new demat accounts have been opened.

Read the entire discussion paper here.

With inputs from PTI

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Updated Date: Mar 31, 2015 07:49:07 IST