Relaxation measures suggested by SEBI for startups to attract additional capital
December 16, 2020
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A slew of relaxation measures for startups as suggested by SEBI is expected to attract additional capital and open up exit options for investors.
On December 14, SEBI proposed a framework for listing on the Innovators Growth Platform (IGP). The genesis of IGP can be traced back to 2015, when SEBI introduced the Institutional Trading Platform (ITP) with a view to build a real-time, liquid public market platform for new economy companies both for raising funds as well as exploring exits.
As the ITP framework failed to take off, it got renamed to IGP. In an effort to kickstart this platform, and to ensure that investors and startups both gain, SEBI has proposed a set of actions .
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Sebi proposes relaxing norms for listing start-ups
Photo by Ketut Subiyanto from Pexels
Seeking to boost listing of start-ups, markets watchdog Sebi on Monday proposed a slew of relaxations to norms, including reducing holding period for pre-issue capital, providing differential voting rights to promoters and allowing discretionary allotment to all eligible investors.
The changes have been proposed to the framework for listing on the Innovators Growth Platform (IGP). Other proposals include retaining superior voting rights for existing institutional investors holding over 10 per cent of the capital, and easing delisting requirements.
Issuing a consultation paper to review the IGP framework, Sebi has suggested reducing the period of holding of 25 per cent of pre-issue capital of the issuer company by eligible investors to one year from current requirement of two years.