The Securities and Exchange Board of India (SEBI) on November 16 published a consultation paper proposing a number of changes to the initial public offering (IPO) framework. The proposed changes include more scrutiny on how startups raising funds through an initial public offering (IPO) use that money including how they use it for future acquisitions or investments. This proposal comes on the heels of many tech startups going public in recent months including Zomato, Nykaa, Policybazaar, and Paytm. Zomato in fact announced last week that it is planning to invest nearly $1 billion in startups in the next couple of years presumably from funds raised through its IPO. Such investment plans have to be revealed before the IPO if the rules proposed below are incorporated into the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. In addition to proposing additional scrutiny, SEBI…
