U K Sinha says new policy for start-up companies in 3-4 months

The Sebi chairman also hints at GIFT Regulations by April 1

The stock market regulator is taking a number of steps to try and put in place a policy for start-ups and e-commerce companies to list in India rather than going abroad.

The Securities and Exchange Board of India (Sebi) has held meetings to discuss the issue in both Mumbai and Bangalore, Sebi chief UK Sinha said on Friday.

"We want our companies to list in India rather than being forced to go to list outside India. In December, we had a meeting with about 40-50 people in Bangalore, we tried to understand their requirements. This was followed up by a discussion with the primary market advisory committee of Sebi recently and now, on 27th, I have invited them here in Bombay and we'll be having a discussion with them," he said while speaking on the sidelines of a Sebi-organised international conference on Real Estate Investment Trusts (REITs).

Many Indian start ups and e-commerce companies including Flipkart, are reportedly exploring an overseas listing though the company denied IPO plans in response to an earlier Business Standard query. A new set of regulations are being contemplated to allow such companies to list within the country. A decision on this may be taken as early as June or July, according to Sinha.

"It appears that a certain set of rules will have to be carved out for them because they have a very specific business model. We'll float a consultation paper.. and we hope that in the next 3-4 months, we'll be having our policy in place. We want them to get listed here," he said, emphasizing the need to get Indian companies listed here than in international jurisdictions.

India's own attempt to create an international finance centre in Gujarat has a number of regulatory issues which are being ironed out. Both the Reserve Bank of India as well as Sebi are working on the same, according to Sinha. The new financial centre is being located in the Gujarat International Finance Tec-City, the so-called GIFT city.

"....GIFT has been announced in the budget and the timeframe has also been given effective 1st of April, we're in constant touch with RBI and RBI and Sebi will come out with a formulations before 1st of April," he said.

He added that there are a number of issues being ironed out, including over jurisdiction and the application of the Foreign Exchange Management Act (FEMA). The Act places restrictions on foreign transactions involving both foreign exchange as well as securities.

"There are challenges... How do you treat this territory? Is it an Indian territory or foreign territory in the technical term. How FEMA will apply or not apply? All those things are there. We're in the (discussion) process, I'm not in a position to disclose the final outcome going to be except that it would be out before 1st April," he said.

He said that the announced merger of the commodities regulator with Sebi will soon be carried out with Sebi having offered some suggestions which are largely procedural.

He added that there will be action against companies who do not get at least one women director on their boards as required by recent regulations.

"if people do not follow it willingly, then it will have consequences. And the consequences will be as per law and can be very serious. I find it very shameful that in this country, about 8,000 or 9,000 listed companies, can't find even one woman who is competent enough to be on their board," he said.