The Securities and Exchange Board of India (Sebi) on Thursday announced a clutch of relaxations to encourage the listing of start-ups even as it tightened rules for de-listing of other entities on the main board.

At its board meeting on Thursday, the market regulator also made it mandatory for the top 1,000 listed firms on the basis of market capitalisation to have a dividend distribution policy (from the current top 500) and directed that they should also constitute a risk management committee.

It also amended the Alternative Investment Fund (AIF) Regulations and made some changes to the framework for re-classification of promoter group entities.

On start-ups

In 2015, the market regulator had introduced a new segment called Institutional Trading Platform (ITP) to facilitate listing of new age start-ups. However, the ITP framework failed to evince interest.

Subsequently in 2019, it attempted to revive the platform by introducing certain amendments to the ITP framework and renamed it as the Innovators Growth Platform (IGP). This IGP is aimed at technology-intensive issuers.

At present, the key requirements for issuer companies to list under IGP are that 25 per cent of their pre-issue capital should have been held for at least a period of two years by qualified institutional buyers (QIBs), family trust, accredited investors (individuals with a net worth of over Rs 5 crore and income of over Rs 50 lakh or a body corporate with a net worth of over Rs 25 crore) and regulated entities like foreign portfolio investors.

Further, not more than 10 per cent of the pre-issue capital held by accredited investors is to be considered for 25 per cent pre-issue capital eligibility requirement.

The regulator decided to reduce the period of holding of 25 per cent of pre-issue capital of the issuer company by eligible investors to one year from the requirement of two years.

More importantly, such investor’s pre-issue shareholding should be considered for the entire 25 per cent of the pre-issue capital of the issuer company against the current limit of only 10 per cent.

On the listing of companies on the main board, the issuer company on IGP can allocate up to 60 per cent of the issue size on a discretionary basis, prior to the issue opening for subscription to eligible investors with a lock in of 30 days on such shares.

Delisting disclosure

The promoter or the acquirer will be required to disclose their intention to delist the company by making an initial public announcement. Further, the committee of independent directors will be required to provide their reasoned recommendations on the proposal for delisting.

Moreover, timelines for completion of various activities as a part of the delisting process have been revised to make the process more efficient.