The Securities and Exchange Board of India (SEBI) has proposed an alternative capital raising platform (pdf) making it easier for startups in India to raise funds through initial public offerings (IPOs). The markets regulator has recommended setting up an institutional trading platform (ITP) for companies to list and relaxed post-listing lock-in for major shareholders of these firms and eased disclosure requirements that IPO-bound companies have to make in their issue prospectus on how they plan to use the money from the offering. "It is proposed that the new platform for raising money within the country will be initially made applicable to companies which are in the area of software product development, e-commerce, new-age companies having innovative business model, etc. which create new business opportunities or which serve important efficiency enhancement in existing business activities," SEBI said in a discussion paper. SEBI had introduced ITP in 2013 to allow small and medium enterprises to list without having to make an initial public offer. Notes from the discussion paper - The proposed platform will have two categories of investors i.e. Qualified Institutional Buyers (QIB) and Non-institutional investors (NII). It has been suggested that the family trusts may also be allowed to apply under the QIB category. - Allotment to QIBs may be on a discretionary basis whereas to NIIs it shall be on proportionate basis. Allocation between the said two categories shall be in the ratio of 75% and 25% respectively. Any under subscription in non-institutional categories shall be available to QIB category…
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