Seeking to enhance listing of start off-ups, markets watchdog Sebi on Monday proposed a slew of relaxations to norms, which includes decreasing holding period for pre-situation capital, delivering differential voting rights to promoters and permitting discretionary allotment to all eligible investors.
The adjustments have been proposed to the framework for listing on the Innovators Growth Platform (IGP). Other proposals incorporate retaining superior voting rights for current institutional investors holding more than 10 per cent of the capital, and easing delisting specifications.
Issuing a consultation paper to evaluation the IGP framework, Sebi has recommended decreasing the period of holding of 25 per cent of pre-situation capital of the issuer firm by eligible investors to a single year from existing requirement of two years.
On the lines of provisions for listing of organizations on the most important board, Sebi has proposed that the issuer firm on the IGP should really be permitted to allocate up to 60 per cent of the situation size on a discretionary basis prior to situation opening for subscription.
Also, the discretionary allotment should really be permitted for all eligible investors, as per the consultation paper.
Issuer organizations in search of listing below IGP should really be permitted to situation Differential Voting Rights (DVRs) and Superior Voting Rights (SRs) equity shares to promoters and founders, Sebi has recommended.
The regulator has also proposed that there should really be continuation of unique rights, such as board seat and veto or affirmative voting rights, for current institutional investors holding in excess of 10 per cent of capital.
Another proposal is to exempt Alternative Investment Fund (AIF) Category II investors from post situation lock-in requirement of six months, topic to particular situations.
Further, Sebi has recommended that accredited investor’s pre-situation shareholding should really be deemed for whole 25 per cent of the pre-situation capital of the issuer firm.
As far as the IGP platform is deemed, there is no distinction among AIs (Accredited Investors) and QIBs (Qualified Institutional Buyers), as each are informed investors, the consultation paper stated.
“Therefore, the said limit of 10 per cent on AIs may be removed and AIs’ pre-issue shareholding may be considered for entire 25 per cent of the pre-issue capital required for meeting eligibility condition norms,” it added.
According to the consultation paper, AI definition needs clarity as to irrespective of whether promoters are excluded from it. Pre-situation capital held by promoters or promoter groups even if they are registered as AIs should really not be deemed for 25 per cent eligibility requirement.
It has been advised that family members trusts should really be integrated in AI definition. Currently, definition covers only men and women and body corporate.
“Since, life cycle of start-up companies eventually lead them to get merged or acquired by a larger company, stringent takeover requirements, may become a road block in such scenarios,” Sebi noted.
Accordingly, the regulator has advised the threshold trigger for open supply may perhaps be relaxed from the 25 per cent to 50 per cent and other disclosure requirement thresholds should really also be relaxed.
Sebi has recommended delisting may perhaps be deemed if 75 per cent of the total shareholding and voting rights are acquired against the present requirement of 90 per cent.
Also, it has recommended relaxed framework for organizations in search of to migrate to the most important board.
An IGP firm can migrate to the most important board supplied 40 per cent of its total capital as on the date of application of migration is held by QIBs as against the present criteria of 75 per cent, as per the consultation paper.
Public comments on the consultation paper have been sought till January 11.
In 2015, Sebi introduced the Institutional Trading Platform (ITP) with a view to facilitate listing of new age start off-ups. However, the ITP framework failed to evince interest. Last year, Sebi renamed it as the Innovators Growth Platform (IGP).