Proposed Norms For Start-Ups From SEBI
Securities and exchange board of India or SEBI is the market regulator in investing. This board is responsible for the security deposits in the stocks and shares. They have introduced changes in the number of investors. The number of minimum investors has been cut down, but the minimum gardening period has been expanded. These changes are followed by the firms listed in a platform especially for them before they get into other main courses.
Before the minimum investors were 500 as on March and now the board meeting on Tuesday has decided that the number is 200. The migration period for the new start-ups into exchange platform was one year, but now it is prescribed to be three years. The business domain for the companies who wants to tap into this platform is also expanded. The companies which are into information technology, data analytics, biotechnology, intellectual property or nano- technology to give products or services will have such domains. Domain is available for also the companies in the business platforms with an additional value with 25 percent of issued capital held by QIB or the qualified institutional buyers. This holds good for the companies wherein 50 percent of the issued capital is held by QIB`s.
SEBI said in March that the platform is open for mainly software development and e-commerce but now added the new companies with innovative ideas. The minimum investment for the investors was Rs. 5 lakh before and now it is Rs. 10 lakh for a single investor.
The shares have the lock in period for 6 months for the current investors. Ten lakh will be the minimum investment by the single investor. A limit of ten percent has to be from a single investor. A single investor should not cross the limit of 25 percent stake in a company.
The alternative investments registered in AIF norms to the start-up companies in the trading platform is considered as not registered to bear with its own investment conditions. There is a limit for such investments to the firms which are not listed in the country. The companies which are planning to be enlisted in the trading platform can determine their issue price.
SEBI issued a circular saying that the issues may not include P/E, EPS parameters instead they may include except projections and disclosures as per their estimate. Mr. UK Sinha, Chairman of SEBI said this would encourage the number of start-ups in India.
There is a lot of improvement in the start-ups in the country and thus ranked fifth. More than 3100 startups are recorded and a lot of M& As also. There is special provision for start-ups said, Mr. Sinha.
Harish HV, a partner at Grant Thornton India said that guidelines for a new ITP for the start-up companies and some technology companies to guide these start-ups was a welcoming factor. These companies are considering India as an option and are following the guidelines.
Harish was the think tank for creating a favorable environment for the start-up companies when he was working for ISPIRT or Indian Software Product Industry Round Table.
Though there may be some drawbacks let us hope for a good start. US have started such guidelines and simultaneously SEBI also has started it showing its foresightedness. Start-up companies should not look down this factor and should list in India. This will help the wealth generation to be available to Indians. There is a good response from the start-ups also.
There were policy discussions in various levels encouraging the start-up companies to list in India. This took place in the SEBI board meeting founders and startup investors of ISPIRT in Bangalore, held in the third week of December.