New rules on cards for startup listing on stock exchanges
A new definition, separate trading platform and higher entry barrier to discourage riskaverse small investors will form the contours of a new set of rules to enable startups to list on stock exchanges.
Capital market regulator Sebi, which is preparing a discussion paper on the subject, will also relax disclosure norms relating to use of funds raised in maiden public stock offering by such companies.
Even though most startups — backed by venture capitalists and angel investors — are loss making and may not attract too many retail investors, the Securities and Exchange Board of India (Sebi) fears that an absence of listing opportunity in India could drive these firms to tap overseas bourses that offer softer regulations and easier listing facilities.
The regulator plans to define 'startups' — where no single stakeholder or interest group holds 25% or more equity stake — as "professionally managed companies", said a person familiar with the discussions.
Most unlisted startups are funded by VCs, private equity (PE) houses and ultra high net worth individuals, with founders holding comparatively lower stakes.
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A new definition, separate trading platform and higher entry barrier to discourage riskaverse small investors will form the contours of a new set of rules to enable startups to list on stock exchanges.
Capital market regulator Sebi, which is preparing a discussion paper on the subject, will also relax disclosure norms relating to use of funds raised in maiden public stock offering by such companies.
Even though most startups — backed by venture capitalists and angel investors — are loss making and may not attract too many retail investors, the Securities and Exchange Board of India (Sebi) fears that an absence of listing opportunity in India could drive these firms to tap overseas bourses that offer softer regulations and easier listing facilities.
The regulator plans to define 'startups' — where no single stakeholder or interest group holds 25% or more equity stake — as "professionally managed companies", said a person familiar with the discussions.
Most unlisted startups are funded by VCs, private equity (PE) houses and ultra high net worth individuals, with founders holding comparatively lower stakes.
CSGAURAV +919990694230
Subscribe to CS GAURAV SHARMA by Email
