SEBI Relaxes Norms For Listing Of Startups On Stock Market - All You Need To Know

The board of the capital market regulator reduced the eligibility requirement for issuer firms to have 25% of pre-issue capital held by eligible investors from the current two years to one year.

Securities and Exchange Board of India (SEBI) | File Image

As part of its attempts to encourage the listing of startups on Indian stock exchanges, capital market regulator Securities and Exchange Board of India (SEBI) has relaxed the norms for listing on Innovators Growth Platform (IGP), a special platform created for listing such ventures.

The board of the capital market regulator, which met on Thursday, reduced the eligibility requirement for issuer firms to have 25% of pre-issue capital held by eligible investors from the current two years to one year.

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It further allowed the companies to allocate up to 60% of the issue size on a discretionary basis to eligible investors with a lock-in of 30 days. Earlier, the option of discretionary allotment was not available to companies.

These decisions assume significance as they are based on the feedback received from market participants even as Indian startups have not actively evaluated listing on Indian exchanges citing cumbersome regulatory framework.

"The Board has approved the proposals... with an objective to make the platform more accessible to companies in view of the evolving start-up ecosystem," said a SEBI statement.

Meanwhile, for companies that are listed on IGP and want to migrate to the mainboard and are not profitable, the regulator has allowed provided institutional investors to hold 50% of the equity. 

Earlier, it was allowed only if institutional investors held a 75% stake. 

On a different note, the regulator has amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to make it mandatory for the top 1,000 listed entities to have a dividend distribution policy.

Earlier, this was mandatory for the top 500 companies.

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Also, if the board meeting of a company goes on for more than one day, then the company will have to mandatorily disclose the financial results to the stock exchanges within 30 minutes of the end of the board meeting on the day the financial results are considered.

Further, the regulator has made it mandatory for companies to disclose audio and video recording of analysts and institutional investors meets. Written transcripts of such meetings will also have to be disclosed within five working days, said SEBI.

The regulator has also tweaked certain norms for the delisting of companies.