September 26, 2019

SEBI Announces Norms For Startup Companies Listed on IGP To Trade On Main Board Of Stock Exchanges After An Year

[ By Bobby Anthony ]


The Securities & Exchange Board of India (SEBI) has issued a notification that startup companies listed on the Innovators Growth Platform (IGP) of stock exchanges to shift to regular trading after an year.

SEBI stated that it has amended the Issue of Capital and Disclosure Requirements (ICDR) or Fourth Amendment Regulations.

The new regulation would come into force with immediate effect. Under the new rules, a start-up company would need to have a profitability or net worth track record of three years or at least 75 per cent of its shareholding should be with qualified institutional investors (QIBs).

Startup companies can opt to trade under the regular category on the main board of stock exchanges after their initial public offerings.

The announcement comes after the SEBI approved a detailed set of norms for listing of startups in August.

The period of earlier six-month lock-in served at the time of listing on the startup platform would also be included in the three-year period to be eligible for trading on the main board of stock exchanges.

As per the latest SEBI notification, the minimum promoter contribution would have to be 20%, which would be locked in for a period of three years.

Any company interested in getting listed on the main board of stock exchange for regular trading would have to follow stringent disclosure and eligibility norms as well as for an initial public offer (IPO).

The SEBI notification stated that a startup a company would have to be listed on the IGP for at least one year for migration and have at least 200 shareholders at the time of its migration to the main board of stock exchanges.

The new norms also require the company to have net tangible assets of at least Rs 3 crore, calculated on a consolidated basis, in each of the preceding three years, of which maximum 50% can be held in monetary assets.

For migration, the startup company would need to have an average consolidated operating profit of at least Rs 15 crore during the preceding three years, with an operating profit having been recorded in all the three years.

The net worth threshold of the company should be at Rs 1 crore for each of the three preceding years.

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