Start-ups and SMEs are allowed to list without IPO by SEBI

In India, technology companies are small part of stock market compared to US, UK and Hong Kong, due to lack of exit opportunities for investors and restricted access, these are the major problems faced by startups and SMEs.
 
SEBI realized the situation, it can only be fixed if home grown technology companies are listed in India. The SEBI board meeting in June approved many rules to permit listing of startups and SMEs in Institutional Trading Platform (ITP) without IPO. Also market regulator is likely to approve relaxed listing norms to encourage the booming startup industry to tap the institutional trading platform. The main aim is to provide easier exit options for entities such as Angel Investors, Venture Capital Funds and Private Equities. Start-ups and SMEs listing on ITP is expected to offer their existing investors more chances to find alternative buyers than if they search using their own network in the investment community.
 
In the meeting held in June, SEBI discussed that the minimum amount for trading and investment on the ITP would be Rs 10 lakh, and those companies also be exempted from the requirements of having to offer up to 25 per cent of shareholding to public with the offer document in order to get listed. The lock-in for pre-issue capital for shareholders will be for six months instead of three years.
 
The disclosure norms relating to use of funds raised in maiden public stock offerings will also be relaxed for such companies, Without specifying the level of required details those companies will be allowed to use IPO proceeds for general corporate purposes. The rules currently stipulate that no more than 25 per cent of the funds raised can be used for general corporate purposes, so the companies can save the funds for future uses.
 
However, with the help of new proposed rules, SEBI will be able to strike a good balance between protecting retail investors and encouraging the knowledge based companies. It will help to start-up companies can easily enter into market without following the old long rules. And expecting the Indian market will boom up with the help of SMEs. With an advanced trading platform and better services launch of ITP, It will be valuable for investors and companies.