Finding no takers for ITP, SEBI to tweak listing norms for start-ups again


SEBI's Listing Norms

Indian capital market regulator SEBI is likely to tweak listing norms related to listing of start-ups. SEBI is expected to take up the matter of start-up listing norms in India in a board meeting next month, said a PTI report. The regulator allowed start-ups last year to list on a separate platform, named Institutional Trading Platform (ITP). The ITP excluded retail investor category by keeping minimum trading lot and the minimum application size at INR1 million. In contrast, retail investors are allowed to make applications as big as INR200,000 in IPOs on the main boards. The measure to exclude small investors was taken to shield them from risky businesses. We voiced our reservations (read more here) against this discrimination as the measure, while safeguarding small investors, essentially robs them of exploring opportunities in new-age businesses.

Under the updated listing norms, the regulator relaxed disclosure requirements and also reduced the mandatory lock-in period for promoters and other pre-IPO investors to six months. Regulations require such investors to stay put for three years in case of other companies. Despite SEBI’s efforts to make the domestic stock exchanges attractive for start-ups, the platform has not seen any listing so far even though technology businesses tapped primary markets in the timeframe, a relevant example being India’s first listed e-commerce player Infibeam.

“Not a single company has got listed on this so far, although we formulated the rules after very very 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,” said U K Sinha, SEBI Chairman.

Read Also: Why SEBI’s e-IPO norms are two steps forward and one step back

“What we have noticed is that most of the companies that have got listed in past one 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.

It is not immediately clear what proposals for listing norms the regulator will be considering but Sinha answered in affirmative when asked if SEBI received feedback from the industry. “Yes, we have received some suggestions that we will study and incorporate them appropriately,” said Sinha.


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