Sebi to amend regulations concerning the ITP Platform
Stock market regulator Securities and Exchange Board of India (Sebi) today, 23 June 2015, approved enabling provisions to facilitate capital raising by technological start-ups and other companies through Institutional Trading Platform. The existing ITP Platform will now be called Institutional Trading Platform (ITP). The ITP platform will be made accessible to companies which are intensive in their use of technology, information technology, intellectual property, data analytics, bio-technology, nano-technology to provide products, services or business platforms with substantial value addition and with at least 25% of the pre-issue capital being held by QIBs (as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009) or to any other company in which at least 50% of the pre-issue capital is held by QIBs. No person (individually or collectively with persons acting in concert) in such a company shall hold 25% or more of the post-issue share capital. Considering the nature of business of companies which may list on the ITP, disclosure may contain only broad objects of the issue and there shall be no cap on amount raised for General Corporate Purposes. The lock in of the entire pre-issue capital shall be for a period of 6 months from the date of allotment uniformly for all shareholders, Sebi said.
As the standard valuation parameters such as P/E, EPS, etc. may not be relevant in case of many of such companies, the basis of issue price may include other disclosures, except projections, as deemed fit by the issuers. Companies intending to list on the proposed ITP, shall be required to file draft offer document with SEBI for observations, as provided in SEBI (ICDR) Regulations, 2009.
Only two categories of investors can access the proposed ITP. One of them is institutional investors and the other category is Non-Institutional Investors (NIIs) other than retail individual investors.
In case of public offer, allotment to institutional investors may be on a discretionary basis whereas to NIIs it shall be on proportionate basis. 75% of the allocation shall be to institutional investors and the remaining 25% to NIIs.
In case of discretionary allotment to institutional investors, no institutional investor shall be allotted more than 10% of the issue size. All shares allotted on discretionary basis shall be locked-in in line with requirements for lock in by Anchor Investors which is 30 days at present. The minimum application size in case of such issues shall be Rs 10 lakh and the minimum trading lot shall also be of Rs 10 lakh. The number of allottees in case of a public offer shall be 200 or more.
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The company will have the option to migrate to main board after 3 years subject to compliance with eligibility requirements of the stock exchanges.
The existing companies listed on SME-ITP may continue to be guided by the existing regulatory framework for them, including applicable relaxations from compliance with corporate governance requirements.
Sebi also said that in order to rationalize the disclosures requirements for all issuers whether intending to list on the main board or the proposed ITP, it has been decided that the disclosures in offer document with respect to group companies, litigations and creditors shall be in accordance with policy on materiality as defined by the issuer. However, all relevant disclosures shall be available on the website of the issuer. Also, the product advertisements of an issuer will not be required to give details of public/rights issue.
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