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SEBI relaxed the IPO norms for technological start-ups to raise funds from capital market

Jun 24, 2015 12:30 IST

The Securities and Exchange Board of India (SEBI) on 23 June 2015 relaxed the norms for technological start-ups to raise funds from the capital market while easing the norms for issuance of Initial Public Offering (IPO) by companies.

It reduced the post-listing lock-in period for tech start-up promoters to six months, instead of three years for other IPOs.

Moreover, the exchanges will have a separate platform for the start-ups that is Institutional Trading Platform (ITP) and it will facilitate capital raising as well for start-ups. This platform is accessible to companies which are intensive in their use of technology, information technology, intellectual property, data analytics, bio-technology and nano-technology.

This will offer products, services or business platforms with the substantial value addition and with at least 25 percent of the pre-issue capital being held by QIBs (Qualified Institutional Buyers), or any other company in which at least 50 percent of the pre-issue capital is held by QIBs.

However, no person in such a company shall hold 25 percent or more of the post-issue share capital.

SEBI also reduced the requirement of market capitalisation of public shareholding of the issuer for Fast Track Issues (FTI) from 3000 crore rupees to 1000 crore rupees in case of Follow on Public Offering (FPO) and to 250 crore rupees in case of Rights issue.

It also rationalised the framework for reclassification of promoters as public. This framework will bring in consistency and also enable investors to take informed decisions based on any such move by the company/promoters.

While streamlining the process of IPOs, SEBI allowed Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) to accept application forms and make bids on the stock exchange platform.

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