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Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2019 for Startups

On 5^th April, 2019, SEBI has notified the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2019. Further, SEBI has come up with relaxing norms for listing of new-age venture start-ups which operates in e-commerce, data analytics, biotechnology, and nanotechnology sectors to raise funds and get their shares traded on stock exchanges.

Eligibility Criteria for listing of Issue Of Securities as per Securities and Exchange Board of India

Any issuer or issuer company which is intensive in the use of

• technology,
• information technology,
• intellectual property,
• data analytics,
• biotechnology or
• nano-technology

to provide products, services or business platforms with substantial value addition, shall be eligible for listing on the Innovators’ Growth Platform. 

Provided that as on the date of filing of draft information document or draft offer document with the board:

25 % of the pre-issue capital of the issuer company for at least a period of 2 years, should have been held by:

• Qualified institutional buyers (QIBs); or
• Family trust with net-worth of more than 500 crore, as per the last audited balance sheet; or
• Accredited investors for the purpose of Innovators Growth Platform; or

• The following regulated entities:
• Category III Foreign Portfolio Investor;
• An entity which meets all the following criteria:
  • It is a pooled investment fund with minimum assets under management of one hundred and fifty million USD;
  • Registered with a financial sector regulator in the jurisdiction of which it is a resident;
  • It is resident of a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding or a signatory to Bilateral Memorandum of Understanding with the Board;
  • Moreover, it is not resident in a country identified in the public statement of Financial Action Task Force

Issuer seeking listing of its Specified Securities without making a Public Offer 

Firstly, he shall file a draft information document along with the necessary documents with the Board in accordance with these regulations along with the fee as specified in Schedule III of ICDR regulations. Moreover, the draft information document shall contain disclosures as specified for the draft offer documents in Securities and Exchange Board of India ICDR regulations as specified in Part A of Schedule VI.

Minimum Public Shareholding Norms and Minimum Offer Size

• The issuer shall be in compliance with minimum public shareholding requirements specified in the Securities Contracts (Regulation) Rules, 1957.
• The minimum offer size shall be ten crore rupees

Particulars	Amount
Minimum Offer Size	Rs. 10 Crore
Minimum Application Size	Rs. 2 lakh and in multiples thereof
Minimum Trading Lot	Rs. 2 lakh

Minimum Number of Allottees

The minimum number of allottees shall be at least 50.

Allotment on a proportionate basis

The allotment to institutional investors as well as non-institutional investors shall be on a proportionate basis.

Lock-in period

The entire pre-issue capital of the shareholders shall be locked-in for a period of 6 months from the date of allotment in case of listing pursuant to a public issue or date of listing in case of listing without a public issue.

Migration to the main board

An issuer that has listed its specified securities on a recognized stock exchange may at its option migrate to the main board of that recognized stock exchange after the expiry of three years from the date of listing. However, this must be subject to compliance with the eligibility requirements of the stock exchange.

The notification released by the SEBI can be read here