SEBI proposes changes in ITP norms to attract more firms

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The Securities and Exchange Board of India (Sebi) on Friday proposed changes to the Institutional Trading Platform (ITP), to draw more companies to it. Comment on the discussion paper has been invited till August 14.

Introduced in 2013, the platform allows companies, particularly in information technology (IT), to list without necessarily doing an Initial Public Offer of equity. So far, only around 40 companies are listed on the ITP platforms of the BSE or the National Stock Exchange.

IT companies to qualify on this platform need Qualified Institutional Buyer (QIB) shareholding of at least 25 per cent; other companies need 50 per cent. Sebi has proposed to expanded the definition of QIBs to investors such as family trusts and individual foreign investors. Also, to do away with the 25 per cent cap on single investors listed on the platform.

Further, it proposes to reduce the minimum institutional investor participation, from 75 per cent to 50 per cent. Also, to increase the ceiling on allotment to individual institutional investors from 10 per cent to 25 per cent to a single entity. Sebi has also proposed to make market making compulsory for a minimum of three years for an issue size of less than Rs 100 crore.

More important, it has proposed to ease trading lots on the ITP platform from Rs 10 lakh to Rs 5 lakh. Interestingly, Sebi has also proposed to rename ITP as  ‘high-tech start-up & other new business platform’.

Source: http://www.business-standard.com/article/markets/sebi-proposes-changes-in-itp-norms-to-attract-more-firms-116072901316_1.html

IPOs of start-ups in India: Retail investors participation may get cleared

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Retail investors might soon be allowed to participate in the initial public offerings (IPOs) of start-ups with the Securities and Exchange Board of India (Sebi) planning to scrap the Institutional Trading Platform (ITP) for these firms. The move comes after the platform failed to witness a single listing since it was launched last year.

Sources privy to the development said instead of providing an exclusive platform for start-ups, Sebi is now planning to allow start-ups to list on the regular platform. However, some relaxations would be provided  in terms of disclosures and compliance norms. Sebi is planning to amend both the Issue of Capital and Disclosure Requirements (ICDR) and Listing Obligations and Requirements (LODR) regulations, accordingly.

As per the regulations relating to Capital Raising and Listing on Institutional Trading Platform regulations for start- ups, only institutional investors and high-net worth individuals (HNIs) are allowed to trade on ITP and the minimum ticket size was `10 lakh. Retail investors were not allowed to invest in such issues as the markets regulator felt small investors should be safeguarded against a higher level of risks associated with the platform.

Several start-ups have expressed concerns about the liquidity on ITP. Further, not even a single company has filed for an IPO on the special platform till date. Hence, Sebi wanted to review the regulations and address the concerns raised by the start-ups,” said a member of Sebi Primary Markets Advisory Committee (PMAC).

Allowing start-ups to list on the regular platform would also address the concerns regarding the minimum institutional ownership clause in the regulations. As per the current regulations, to be eligible to raise funds via an IPO, 50% of the pre-issue capital of the company must be held by qualified institutional buyers (QIBs). In the case of e-commerce and technology start-ups, 25% of the pre-issue capital should be owned by institutional investors.

In August 2015, the regulator had announced a new set of listing regulations for start-ups operating in the e-commerce space in sectors such as information technology (IT), data analytics and biotechnology.The regulations provided several relaxations to start-ups keeping in mind the unique nature of the industry including removal of caps on the money spent by start-ups on publicity and advertisements as they need to spend much more for such purposes.

Infibeam, an e-commerce company that went for an IPO in the current calendar year, chose to list on the main board instead of the ITP. Although the company filed its draft prospectus with the regulator before the ITP was announced, the company had a choice to migrate, subsequently. According to investment bankers, the company didn’t choose ITP because of concerns about the platform.

 

Source:http://www.financialexpress.com/markets/indian-markets/ipos-of-start-ups-in-india-retail-investors-participation-may-get-cleared/323787/

Now, listed companies’ management to explain audit qualifications : SEBI

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Markets regulator Sebi today asked listed companies to disseminate cumulative impact of audit qualifications in a separate format along with the annual audited financial results to the stock exchanges.

Besides, the management of a company would be required to explain its view about audit qualifications.

The new framework would ensure that the impact of audit qualifications are clearly communicated by the companies concerned to their investors in a timely manner apart from streamlining the whole process.

Sebi decided to have the new system on audit qualifications after extensive discussions with its advisory committees, Institute of Chartered Accountants of India (ICAI), stock exchanges and industry bodies.

Now, listed entities will be required to disclose the cumulative impact of all audit qualifications on relevant financial items in a separate form called ‘Statement on Impact of Audit Qualifications’ instead of the present form.

Such disclosures will have to be made in a tabular form, along with annual audited financial results filed in compliance with the listing regulations.

The new mechanism will be applicable for all the annual audited standalone/consolidated financial results, submitted by the listed entities for the period ended March 31, 2016 and thereafter.

The listed entity will have to furnish a declaration in case there are no audit qualifications.

In case of audit reports with modified opinion, a statement showing impact of audit qualifications will be filed with the stock exchanges in a format specified by the regulator, Sebi said in a circular today.

Issuing a format for ‘Statement on Impact of Audit Qualifications’ for the financial year, Sebi said that companies will have to disclose net profit, networth, turnover, total expenditure, earning per share, total assets and liabilities.

Besides, the firms will have to make submission about details, types, frequency of audit qualification. The management will have the right to give its views on the audit qualification.

Also, the management of the listed entity will have explain its views on the audit qualifications.

“Where the impact of the audit qualification is not quantified by the auditor, the management shall make an estimate. In case the management is unable to make an estimate, it shall provide reasons for the same. In both the scenarios, the auditor shall review and give the comments,” Sebi noted.

Source: http://www.business-standard.com/article/pti-stories/now-listed-cos-management-to-explain-audit-qualifications-116052700918_1.html

SEBI to delist 4,200 firms; warns erring promoters, auditors

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Capital markets regulator Securities and Exchange Board of India (SEBI) is planning to take a number of steps to deepen it, including forcing thousands of non- or poorly-traded companies to delist and introducing more trading instruments, especially in the commodity space.

These were among some of the steps it outlined with a meeting with senior editors today.
The news would come as relief to investors, whose monies are stuck in companies where no trading takes place.
SEBI chief UK Sinha said the regulator plans to force promoters of companies whose shares do not see active trading both at the main bourses and in regional exchanges to delist.
Such promoters will have to provide an exit route to investors, failing which they will be penalised.
India has about 8,000 listed companies but active trading hardly takes place beyond the top 1,000. As many as 1,200 companies have been suspended for trading for over seven years now, and these will be the first that will be forced to delist.
Besides, there are over 3,000 companies listed on various regional stock exchanges that have become defunct, Sinha said.
The exercise for over 4,200 listed firms would be completed this year. Such exercises would be taken up going forward to clean up the market from what the SEBI chief described as “a source of nuisance”.
He also warned of strong action against the auditors who close their eyes to the lapses in the financial accounts of listed firms.
“So far, we have had a hands-off approach on auditors, but we will take action if something serious comes to our notice. Auditors cannot go scot-free if they have been certifying the books for years without pointing finger at the lapses,” Sinha said.
SEBI also plans to launch more instruments, such as options contracts, in the commodity markets, and will also introduce more commodities for trading.
Sinha also discussed steps that the regulator has taken to ease entry for foreign investors in India, saying that easier FPI registration rules have paid off.
“The number of registered FPIs increased to 8,721 from 4,580 in 2014,” he said.
He also said costs of mutual fund and insurance products in India need to come down and said the regulator had invited former UIDAI chief Nandan Nilekani to advise it on creation of tech platforms for sale and purchase of mutual funds.
“We are also looking to tweak listing rules for startups,” he said.

SEBI relaxes listing, fund-raising norms for startups

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In a major boost for startups, capital markets regulator SEBI has relaxed its regulations for them to list and raise funds through a dedicated platform on domestic stock exchanges, rather than going overseas. Under the new norms approved by SEBI’s board, the stock exchanges would have a separate institutional trading platform for listing of startups from the new age sectors, including e-commerce firms, while the minimum investment requirement would be Rs 10 lakh.

For their listing, SEBI has relaxed the mandatory lock-in period for the promoters and other pre-listing investors to six months, as against three years for other companies. Besides, the disclosure requirements for these companies have also been relaxed, SEBI Chairman U K Sinha told reporters after the board meeting.

At least 25 per cent of their pre-issue capital would need to be with institutional investors for technology startups, while this requirement would be 50 per cent for companies from other areas. Sinha said “Indian startup space is very vibrant and the country is ranked number five as far as startups are concerned. More than 3,100 startups are there in the country and a large number of M&As have also happened.” “However, most of these startups were thinking of listing outside. We have made a very special provision for startups,” he added.

According to PTI, under the new norms, 75 per cent shares can be reserved for institutional investors, while allocation can be on discretionary basis for such investors. For non-institutional categories, it will be on proportional basis.

SEBI has also provided for reclassification of promoters as public investors provided they let go all their special rights, including voting powers, and do not own more than 10 per cent stake. However, an outgoing promoter can serve as a CEO or hold other senior positions for up to three years if the same is approved by the company’s board.

Source: http://yourstory.com/2015/06/sebi-startups-funding/

BSE plans platform for listing startups, easy access to capital

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Leading stock exchange BSE has set up an advisory group to suggest ways to develop BSE Hi-Tech, a platform to help startups list and access capital from sophisticated investors in the securities market. The 13-panel group, which held its first meeting, includes experts from the start-up ecosystem, investors, merchant bankers and legal professionals who will advise BSE on the newly proposed framework on BSE Hi-Tech, which will be based on the new institutional trading platform norms announced by regulator SEBI in August 2015.

Nasscom’s Ravi Gururaj, Khaitan & Co partner Rajiv Khaitan, Tie executive director Naveen Raju and Accel Partners partner Shekhar Kirani, are among the members in the group. “In order to develop BSE Hi-Tech, a platform where young fast growing companies can list and access capital from sophisticated investors, the Exchange has decided to form an advisory group,” the BSE said in a statement.

The group is mandated to interact with various stakeholders including the government, Sebi and industry associations and support in framing policies for the creation of a robust platform. “Deliberations and suggestions will be forwarded to the regulator for their consideration,” the exchange added.

In recent years, the Indian startup ecosystem has witnessed tremendous growth and has come into its own driven by factors such as massive funding, consolidation activities, evolving technology and a burgeoning domestic market. These entrepreneurs need a platform to reach out to potential investors and raise funds to fuel growth.

Source: http://yourstory.com/2015/12/bse-startup-listing/