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In a new wave of reforms, markets regulator Sebi is set to herald an e-IPO system to allow investors to bid online in the public offers, while the new-age startups will get a separate platform to raise funds and list their shares with an easier set of regulations.
The proposed measures, expected to be announced this week after final clearance from the board of the regulatory body, would mark a greater use of latest technology in the marketplace and also help entrepreneurs in various emerging sectors including e-commerce to tap the markets.
The final norms have been finalised after taking into account suggestions from all stakeholders to the two separate sets of draft guidelines floated by Sebi earlier this year, sources said.
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Under the new norms for startups, Sebi will provide 'Alternate Capital Raising Platform', which will allow such firms to raise funding from institutions and high net worth individuals from the capital markets.
However, due to the risks involved, retail investors would not be allowed to invest in such companies.
Besides, the entire pre-issue capital would be locked-in for a period of six months for all shareholders.
At present, promoters are required to offer a minimum of 20 per cent of post-issue capital as lock-in for a period of three years.
Besides, Sebi would make easier disclosure norms for startup listing. While filing the draft offer document with the capital market watchdog, such firms would only need to disclose broad objectives in line with the major international jurisdictions.
These norms will apply to companies which are in the area of software product development, e-commerce, new-age companies having innovative business model.
The new regulations are expected to help startup companies raise funds within India and stop their flight to overseas markets.
The Securities and Exchange Board of India (Sebi) may come out with a detailed guidelines on electronic Initial Public Offers (e-IPOs) this month, where investors can bid for shares on internet.
Initially, investors would be able to place bids through internet and by using broker terminals across the country as against the current practice of filing long documents.
Sebi may drastically cut the timeline for listing of shares within two-three days of the IPO as against 12 days.
The introduction of e-IPO would help eliminate the printing of application forms, help in reducing the overall cost of public issuance and support companies in reaching more retail investors in small towns.
A framework for the use of mobile applications for making bids in public issues may be presented at the board meeting.
Under the norms, investors may also get SMS/e-mail alert for allotment under the IPO, similar to alerts being sent to investors for secondary market transactions.
