Startups may soon find it easier to go public as SEBI proposes new norms

The Securities and Exchange Board of India has proposed to ease its regulations for startups to go public, relaxing several requirements including those related to shareholding norms and investor categories.

The capital markets regulator on Friday issued a consultation paper to review its Institutional Trading Platform (ITP) framework and rename it Innovators Growth Platform (IGP) as part of measures to encourage startups to list on stock exchanges.

The consultation paper comes four months after SEBI set up a group to review the ITP framework. The regulator had notified the ITP framework in August 2015 with an aim to facilitate listing of new-age companies in sectors such as e-commerce, data analytics and bio-technology. However, this framework failed to gain any traction and no startup has listed so far.

The group include representatives from the Indian Software Product Industry Round Table (iSPIRT), The Indus Entrepreneurs (TIE), the Indian Private Equity and Venture Capital Association (IVCA), law firms, merchant bankers and stock exchanges.

The regulator has considered easing startup listing norms previously, too. In 2016, it proposed a raft of changes including allowing family offices and hedge funds to invest in startups’ public offerings. But that still wasn’t enough to lure startups.