New Standards Applicable To The Listing Of Start-Up Companies

New standards applicable to the listing of start-up companies in the stock markets, will be facilitated in raising capital.

Capital market regulator SEBI has notified easy standards of listing on stock exchanges for start-up companies. The aim is to motivate more and more start-up companies to enlist.

The simplified standards also include the exclusive right to issue shares to eligible investors of their own volition.

According to two notifications released on Wednesday this week, changes have been made to the listing framework on the Innovators Growth Platform (IGP).

A resolution in this regard was approved by the Board of Directors of SEBI in March this year.

The new changes have also eased the requirements and paperwork for unlisted listings of listed start-up companies. Along with this, standards have also been made easier for listing the main indices of the stock markets.

Given the manner in which start-up companies are being promoted across the country and young entrepreneurs are coming forward, it was extremely important that such companies have easy access to the major platforms of the stock market.

A major change in the new standards is that the share issuing start-up company or start-up ready to be listed was required to have at least 25 percent of the issued capital for two years, which has now been reduced to one year.

With a view to strengthening the IGP, SEBI has accorded the status of ‘IGP Investor’ to recognized investors.

Not only this, currently such investors will now be allowed to hold up to 25 percent of the pre-issue capital, which was 10 percent earlier.

In the event of these companies being listed in the main index of the stock market, Sebi has said that these companies can give up to 60 percent stake to eligible investors before the issue opens.

The condition for this will be that these investors will not be able to sell such a stake before 30 days. Currently, such companies do not have the right to allot stake to any investor at their own will.

The limit of an open offer for such companies has also been reduced from the current 49 percent to 25 percent.

Stock markets got the strength of strong stocks.

Domestic stock markets got the strength of select stocks in the last trading session of the week. On Friday, the 30-share Sensex Sensex closed up 256.71 points, or 0.52 percent, at 49,206.47.

The 50-share Nifty of the National Stock Exchange (NSE) also settled at 14,823.15 on Friday, improving 98.35 points or 0.67 percent. During the whole week, the Sensex improved by 424.11 points and the Nifty by 192.05 points.

HDFC shares were the biggest gainers in the Sensex pack by 2.70 percent on Friday. Mahindra & Mahindra, Bajaj Finserv, NTPC, Bharti Airtel, ITC, ONGC, and UltraTech Cement also gained 2.68 percent.

In the case of a sectoral index, BSE Metals, Basic Materials, Telecom, Power, Reality, Oil & Gas, Utilities, and Finance closed up by 5.29%. BAE’s midcap fell 0.04 percent, while the smallcap index closed 0.15 percent stronger.