SEBI Regulations and Online Listing for Startups – Aristotle ConsultancyMarket regulator Sebi intends to do away with the concept of promoters for companies that will be allowed to list on a new platform it is planning for startups. The waiving of promoter tag will help startups save on costs related to regulatory compliance and also some of the obligations on the part of such shareholders, including adherence to Takeover Code, Issue of Capital and Disclosure Requirements (ICDR), etc.
One of the important requirements under ICDR rules is the promoter contribution. Under this rule, promoters are required to hold at least 20% in the company that is going for listing. If the ‘promoter’ tag is waived off, even if the founders of startups hold stakes in their companies in single digits, the startups will be able to list, provided the founders adhere to other rules.
Sebi is also set to allow listing by startups from the e-commerce, biotechnology and nanotechnology sectors on this special platform, provided at least 25% of their pre-IPO shareholding is with private equities and ventures funds. “Startups from all other sectors should have at least 50% of their shares held by PEs and VCs at the time of listing on this platform,”.
Sebi’s latest initiative to facilitate startups to tap public money is aimed at helping grow their business faster and smoother. “Considering the role of such companies in nation-building and their potential in terms of generating employment and income as well as fostering innovation, it is imperative that necessary enabling environment is provided for these enterprises to flourish,”
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