Sebi chairman UK Sinha ready for change in startup listing norms

NEW DELHI: Sebi chairman UK Sinha has promised to make fundraising easier for startups and said the markets regulator is willing to consider suggestions for possible changes in the listing norms for such companies to ensure the country has conducive climate and conditions for new-age companies to stay put here.

“We are willing to incorporate them (suggestions for changes in the startup listing norms notified in August), we are willing to understand them,” Sinha said at a conference organised by industry body PHDCCI on Monday.

Various market participants have suggested several changes to the norms with regard to listing of startups including doing away with the requirement of at least 25% of the pre-issue capital to be with institutional investors for technology startups. Regarding keeping small investor out of startups, Sinha said Sebi has to ensure that there is a balance between the interest of investors and the need to develop markets.

“Startups by design are risky companies. There may be good returns but there can also be loss. This is not true just for India but all over world,” he said adding that this is why the regulator kept a minimum investment limit of Rs 10 lakh. As per the Sebi norms, domestic stock exchanges would have separate institutional trading platform for listing of startups from the new age sectors, including ecommerce firms.

For their listing, Sebi has relaxed the mandatory lock-in period for the promoters and other pre-listing investors to six months, as against three years for other companies. Sinha also said startups list migrating overseas to raise funds is not something unique to India.

“We don’t need to panic. These are not a unique phenomenon to India. Exchanges across the world are facing the same situation,” he said. However, he noted that the regulator is trying its best to create conducive climate for startups to fuel India’s growth story by way of restricting their migration to countries such as Singapore and the US.

“Startup and SME IPOs have begun to develop in India. The perception, however, is building that startups are flying away from India,” he said.

The Sebi chief said there are close to 8,000 foreign portfolio investors registered with the regulator, which shows the strength of the country's capital market.

10-Page abridged prospectus for IPOs

Sebi will soon allow companies to file a 10-page abridged prospectus for initial public offers (IPOs) as part of its efforts to help disseminate information in a more investorfriendly manner. The abridged document would have only 10 pages without compromising on information that an investor is required to know, P K Nagpal, executive director (corporation finance department) at the market regulator, said on Monday.

The full prospectus, which can run into 400 to 500 pages currently, would also be available on websites of the company and Sebi. The move is aimed at reducing the compliance burden on companies and individuals as the system would use technology for automatic gathering of information from sources.