Update: SEBI eases norms for public listing of startups

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Update: SEBI eases norms for public listing of startups

Tejasvi

@tejasvi

March 30, 2021

Public Policy

On 25 March 2021, Securities and Exchange Board of India (SEBI), approved various proposals with respect to framework of Innovators Growth platform (IGP) under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), with an objective to make the platform more accessible to companies in view of evolving start-up ecosystem.

The key proposals approved by SEBI are as follows:

Present eligibility criteria under IGP required the issuer to have 25% of pre-issue capital held by eligible investors for a period of two years. This condition has been relaxed and the same is now required to be held for a period of only one year
The term ‘Accredited Investor’ for the purpose of IGP is renamed as ‘Innovators Growth Platform Investors’. At present, pre-issue shareholding of such investors for meeting eligibility is considered for only 10%, which has now been increased and shall be considered for the entire 25% required for meeting eligibility norms
Currently, Issuer Company is not permitted to make discretionary allotment. It has now been decided to allow Issuer Company to allocate up to 60% of the issue size on a discretionary basis, prior to issue opening, to eligible investors with a lock-in period of 30 days on such shares.
In line with the provisions of Main Board IPO, Issuer companies which have issued Superior Voting Rights (SR) equity shares to promoters / founders shall be allowed to list under IGP framework.
For companies listed under IGP framework, stipulation for triggering open offer under Takeover Regulations, 2011, has been relaxed from existing 25% to 49%. However, irrespective of acquisition or holding of shares or voting rights in a target company, any change in control directly or indirectly over target company will trigger open offer.
Delisting under IGP framework shall be considered successful if the post offer acquirer/promoter shareholding, taken together with the shares tendered and accepted, reaches 75% of the total issued shares of that class; and at least 50% shares of the public shareholders are tendered and accepted. Further, for delisting under IGP framework, the Reverse Book Building mechanism shall not be applicable, and for computation of offer price, the floor price will be determined in terms of Takeover Regulations, 2011, along with delisting premium as justified by the acquirer/promoter.
Presently for a company not satisfying the conditions of profitability, net assets, net worth, etc., migration from IGP to Main Board requires a company to have 75% of its capital held by QIBs as on date of application for migration. This requirement is now reduced to 50%.

The above measures will help in making the platform more accessible to companies in view of the evolving start-up ecosystem.

We hope you will find the update.

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Tejasvi