With an aim to boost listing of start-ups, markets regulator Sebi has notified a slew of relaxations to norms, including reducing holding period for pre-issue capital and allowing discretionary allotment to eligible investors.

                The changes have been made to the framework for listing on the Innovators Growth Platform (IGP), Other relaxations include easing delisting requirements and relaxation in guidelines for migrating to main board. This is aimed at making the platform more accessible to companies in view of the evolving start-up ecosystem.

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

                The term ‘Accredited Investor’ for the purpose of IGP is renamed as ‘Innovators Growth Platform Investors’. Such investor’s pre-issue shareholding would be considered for entire 25 per cent of the pre-issue capital of the issuer company against the present limit of only 10 per cent.

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

                         This is subject to that the price of the specified securities offered to eligible investors would not be lower than the price offered to other applicants and eligible investors would make an application of a value of at least Rs 50 lakh.

Also, the threshold trigger for open offer has been relaxed from the existing 25 per cent to 49 per cent.

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                                              STARTUP COMPANY

A company that is in the first stage of its operations; where the entrepreneur moves from the idea stage to securing financing, laying down the basis structure of the business.

           These companies are often initially bank rolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. Due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without additional funding from venture capitalists.

                                                      VENTURE CAPITALIST

Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.