The online startups, Ola, Lenskart and PolicyBazaar amongst others have planned to file a petition to the market regulator, SEBI (Securities and Exchange Board of India), over regulations for listing publically. The startups have demanded to change the guidelines for tech startups for a public listing on the Indian stock markets, particularly the rules around promoter holdings.
SEBI has imposed restrictions on IPO (initial public offering) or direct public listings for startups where the promoter has holdings under 20%. The startups want the rule for the minimum holding requirement of 20% to be removed as it poses a challenge for such startups who want to list themselves for stock exchange. In 2015, the government granted startups to launch IPO through the Institutionalised Trading Platform (ITP). Nonetheless, after the dull response, SEBI relaxed the norms in December 2018 in anticipation of boosting startup listings.
ITP to Innovators Growth Platform
The market regulator changed the name of ITP to ‘Innovators Growth Platform’ and replaced the old rules with new ones. The easing down of the norms follows heated market interest to the existing platform and demands from several stakeholders to make the norms more lenient and the platform more accessible in the wake of expanding activities in the Indian startup space. These new guidelines included a reduction in the minimum trading lot from $14.2k to $2.8k, removal of the cap of 25% for the investors and fixing the minimum net offer size at Rs 10 crore. The new guidelines went into effect from 1st July.
By far, the companies to the public on the BSE are Alphalogic Techsys and Transpact. Any change in the promotor holdings would make the IPOs far more charming for startups, especially after SEBI permitted differential voting rights in July. DVRs or Differential Voting rights are like ordinary equity shares, except that the DVR shareholders have fewer voting rights in comparison to the rights of a regular shareholder. DVRs have been employed by the likes of Tata Motors and Future Retail to enable the founders to retain their control over the firm even when they hold a minority stake.