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SEBI paper proposes easing listing norms for startups

A recent paper by the Securities and Exchange Board of India (SEBI) has recommended easing several requirements for startups to launch initial public offerings on the market regulators' Innovative Growth Platform (IGP). With over 30 unicorns, or billion dollar companies, India's booming startup ecosystem is likely to see several stock listings in the coming years, including Walmart-backed Flipkart and PhonePe. The paper says that despite the market regulators' efforts to encourage startups to list their shares on stock exchanges over the past few years, there have been no listings on the IGP platform. "Recently during various interactions with various start-ups and market participants, SEBI has received certain feedback and suggestions for revisiting the IGP norms. The recommendations / suggestions received were placed before Primary Market Advisory Committee (PMAC) of SEBI," it said. SEBI has invited comments to the consultation paper, the deadline for which ends on January 11, 2021. Recommendations by SEBI Pre-issue capital: At present, at least 25% of pre-issue capital has to be held by eligible investors for two years. The paper recommends reducing the minimum period for holding 25% of the pre-issue capital to 1 year. "Reducing the hold period would help start-up companies in attracting investors who are inclined for an early listing at the time of investing. Further, this will potentially make more number of companies eligible for IGP listing," it said. Lock-in period: At present, the pre-issue capital is required to be locked-in with investors for a minimum of six months from the date…

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