SEBI has already introduced nine improvements to the IGP system based on feedback from startups as well as other industry players and has invited pub After failing to generate interest in startup listing in India, market regulator Securities and Exchange Board of India (SEBI) is looking to revise current requirements after making adjustments in 2019.
SEBI has suggested nine amendments to the Innovators Growth Platform (IGP) system based on feedback from entrepreneurs and other industry participants in a consultation paper titled Analysis of framework of Innovators Growth Platform (IGP) under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and has invited public comments by January 11, 2021.
In terms of qualification requirements, SEBI has proposed that the hold period prior to the listing be reduced from two years, which is seen as a burdensome requirement, to one year in order to assist startups in enticing investors who are interested in an early listing at the time of investment. According to SEBI, more startups will be qualifying for IGP listing as a result of this. According to the new law, qualifying holders must hold 25% of the pre-issue capital for two years. “Even so, as the startup progresses through the different stages, there could be a lot of investor turnover.
As a result, the two-year hold limit for IGP eligibility may be difficult to fulfill, as qualifying investors may choose to withdraw on a regular basis and be replaced by new investors.” Another request from startup companies was to exclude alternative investment fund (AIF)-II group holders from the six-month post-issue lock-in phase if they hold their shares for a year from the time of purchase.
Equity interests owned by a venture capital fund, AIF-I partners, or an international VC, for example, are currently excluded from the requirement. SEBI accepted and proposed in the paper that, similar to the mainboard, where post-issue lock-in conditions are not valid for AIF-II if the securities are kept for a term of one year from the date of acquisition, the same exception be given in the IGP context.