There’s some cheer for startups in India. The Securities and Exchange Board of India (SEBI) has said it would soon be setting up an alternate platform for “Internet startups”. Not only that SEBI Chairman U K Sinha also dropped enough hints that crowdfunding would soon be legally permitted in India.
The capital markets regulator relaxed its regulations for startups to list and raise funds through this new exchange to encourage the companies list in India itself rather than abroad.
Some of the norms relaxed by SEBI include:
- Reduction in the lock-in period for investors in these startups to six months in comparison to three years regular
- Disclosure norms for startups listing themselves in this platform would be diluted
- Process for startups to raise funds through Initial Public Offers (IPOs) fast-tracked by reducing the listing time to 3 days from original 6 days.
SEBI’s new norms have, however, not allowed small individual retail investors to invest in startups. The minimum cap for an investor investing in such a venture would be Rs 10 lakh. Right now it is looking at institutional investors, High Network Individual & Non Resident Indian investors. At least 25% of the pre-issue capital would need to with institutional investors for technology startups, while for companies from other areas this requirement would need to be 50%. The norms allows for 75% shares to be reserved for institutional investors.
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