Capital markets regulator Securities and Exchange Board of India (Sebi) is aiming at introducing new guidelines for technology-related startup companies by June-end in order to promote listing of shares of such companies on domestic exchanges instead of international markets.
To help start-ups and young entrepreneurs raise funds, SEBI today proposed an ‘Alternate Capital Raising Platform’, wherein such firms can raise money from institutions and HNIs from the capital markets under a relaxed regulatory regime.
However, retail investors would be restricted from investing in such companies, given the risks involved therein, SEBI said, while adding that the adequate disclosures would be required to be made without hampering the capital-raising potential of such firms in new-age sectors like technology.
SEBI has sought public comments on the proposal by April 20 this year.
Under the proposed alternate capital raising platform, money should be raised only from institutions and high net worth individuals by the new-age companies having innovative business model and belonging to knowledge-based technology sector.
SEBI has proposed that capital raising would be allowed on the Institutional Trading platform (ITP). The proposed platform will have two categories of investors — Qualified Institutional Buyers (QIB) and Non-Institutional Investors (NII). It has been suggested that the family trusts may also be allowed to apply under the QIB category.
It is proposed that the new platform for raising money within the country will be initially made applicable to companies which are in the area of software product development, ecommerce, new-age companies having innovative business model.
SEBI has also relaxed rules on the level of disclosure firms need to have on how funds will be used. It said, moreover, that the issue price could be decided on the basis of metrics other than earnings per share and price-earnings ratio, given that few start-ups are profitable yet.
SEBI plans to bring out with the discussion paper and the regulations for start-up companies by June to allow such companies to list within the country. Many new technology companies have several issues and are exploring overseas listing.
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