Sebi becons Silicon Valley investors with offer to ease start-up listing norms further

The Securities and Exchange Board of India (Sebi) plans to tweak rules to offer better protection to minority shareholders so as to encourage foreign investment in the country's blooming technology start-ups, U K Sinha, chairman of the market regulator said.

Sinha visited Silicon Valley this week to promote rule changes in India protecting minority shareholders and encourage more investment in the country's thriving technology startups.

''What we have noticed is that most of the companies that have got listed in  the past year or so are in new technology sectors or are technology-driven businesses. This gives us an idea about the direction in which our economy is moving,'' Sinha said.

The Institutional Trading Platform (ITP) is yet to see any start-up listing ever since an easier set of compliance and disclosure requirements was notified in August 2015. Under the rules, start-ups can list on the separate ITP of stock exchanges such as BSE and NSE.

''No single company has been listed on this so far, although we formulated the rules after detailed consultation with the industry and market players. We are again looking at revising the norms as there have been some fresh suggestions from the industry,'' he said.

Sebi, he said, will be making start-up listing platforms even more attractive by relaxing the norms by next month. This will open up avenues for start-ups to raise funds as while also giving existing investors – both local and foreign - an easier exit opportunity.

Sinha said improved regulations make it much easier for investors in the country's over-4,000 technology startups to eventually cash out through initial public offers.

''We have received some suggestions that we will study and incorporate them appropriately,'' he said, adding that Sebi may take up the matter in its next board meeting in July.

Under the notified rule, minimum trading lot and the minimum application size have been kept at Rs10 lakh so that only sophisticated and large investors come in.

For their listing, Sebi had also relaxed the mandatory lock-in period for promoters and other pre-listing investors to six months, as against three years for other companies.

Besides, the disclosure requirements for these companies have been relaxed. The companies can, however, graduate to the main platform later and the small investors can also invest at that time.