Market 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, a Sebi source told TOI. “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,“ the source said.
The Sebi board is meeting on June 23 to deliberate on these rules and is also expected to finalize them. The new rules will also require that the companies listing on the new startup platform should have at least 200 investors.And to insulate small retail investors from the associated risks, Sebi is also setting minimum size of investment through this platform at Rs 10 lakh, the source said.
Source: The Times of India