Skip to main content

SEBI to relax start-up net worth norms, allow listing on SME platform

By
SEBI to relax start-up net worth norms, allow listing on SME platform
Move follows failure of ITP to attract start-ups; many have raised money from PE investors and have much higher networth to qualify for the platform
Market regulator Securities and Exchange Board of India (Sebi) is planning to allow start-ups to list on the small and medium enterprises (SME) platform of the stock exchanges. Sources say start-ups will be given special relaxations on the SME platform in terms of net worth requirements and profitability. The move comes after Indian stock exchanges in coordination with Sebi held several discussions with both the industry participants and to come up with a new framework for start-up listing.
The move comes after Institutional trading platform (ITP), a special segment for listing of new-age companies, failed to take-off.Sources say the idea behind the move is to provide capital raising opportunities to small and mid level start-ups who cannot list on the main board for the higher compliance norms and at the same time are reluctant to consider ITP platform. Although the ITP platform was designed to facilitate start-up listings, companies have not been keen due to several factors including liquidity on the platform.
On the other hand, SME platform has been successful in catering to the capital requirements of small size enterprises with more than 200 listings till date.As per the Sebi listing regulations, a company listing on the start-up platform can have a maximum networth of Rs 10 crore to qualify for an SME listing. However start-ups who have raised money from private equity investors have much higher networth to qualify for the platform.
Since a large part of start-ups are either private equity (pe) or angel investor backed, the market regulator could also introduce the concept of professionally managed companies for SME segment. Such a tweak would enable pe investors and angel funds to get an exit through SME IPO without having to oblige with the compliance requirements of a promoter. Current rules need promoters to own atleast 20 per cent stake in the company and also mandates them to have minimum three years of experience in the same line of business.
“The discussions are currently in an advanced stage and we could expect an announcement in the next one month. Not just Sebi, even stock exchanges have reached out to the new-age companies seeking inputs.If the relaxations are provided, SME platform would emerge as a viable option for start-ups to raise capital,” said a source privy to the development.
The Business Standard, New Delhi, 14th March 2018

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more