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/

Startups get much awaited tax exemptions

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In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.

The Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups.
“The exemption provided to startups from the ‘rigour’ of section 56(2)(viib) of Income Tax Act has been long awaited,” Amit Maheshwari, Partner Ashok Maheshwary and Associates LLP, said.

The effect of the CBDT’s notification is that in case a startup gets investment from resident angel investors, family offices or funds which were not registered as venture capital funds, it will not be taxed even if the investment is made in excess to the fair value.

“It has been a long standing industry demand to abolish this Angel tax,” Maheshwari said.

A startup is a company in which the public are not “substantially interested” and conforms to certain conditions as prescribed by the Department of Industrial Policy and Promotion (DIPP) in February this year.

Under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company, said Rajesh H Gandhi, Partner, Deloitte Haskins and Sells LLP.

“The notification now exempts startups from this rigorous provision. This is a welcome relaxation and would ensure that startups can issue shares to investors at higher than fair value without worrying about any tax consequences,” Gandhi said.

A similar exemption already exists for Venture Capital Funds (VCFs).

Maheshwari said this Angel tax still poses threat to earlier investments which could be perceived as being overvalued in light of the declining valuations globally and in India.

Last week, the DIPP has launched a portal and mobile app through which startups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies.

In January, Prime Minister Narendra Modi had unveiled a slew of incentives to boost startup businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.

Source: http://www.businesstoday.in/current/corporate/startups-get-much-awaited-tax-exemptions/story/233953.html

Gujarat unveils new policy to boost IT, start-ups in 5 years

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As part of Prime Minister Narendra Modi’s “Make in India” and “Start-up India” moves, Gujarat Chief Minister Anandiben Patel, on Sunday, announced her government’s new policy for promotion of information technology (IT) and electronic start-ups, envisaging setting up of 50 incubators to provide leadership and facilities to 2,000 start-ups over the next five years.

About 10 lakh square feet of space will be developed for incubators, targeting investment to the tune of Rs.7,000 crore and creation of new employment opportunities.

The BJP government also announced a slew of incentives for incubators and start-ups, including financial assistance of up to Rs.50 lakh for fixed capital investment and up to Rs.5 lakh per annum for guidance of start-ups. They would be given 100 per cent waiver on stamp duty and registration. Also, they would get a rebate of 100 per cent amount of electricity duty for five years and 50 per cent assistance for software purchase up to Rs.1 crore to incubators.

For start-ups, the government’s incentives include partnership of start-up units for government’s e-governance project, up to 25 per cent equity-linked financial assistance in fund taken for venture capital fund, 100 per cent discount on stamp duty and registration fee and product development and marketing assistance, Rs.15 per square feet per employee lease rental assistance, Rs.2 lakh for local patent and Rs.5 lakh for international patent and some other incentives up to 7 years.

Source: http://www.thehindubusinessline.com/news/national/gujarat-unveils-new-policy-to-boost-it-startups-in-5-years/article8693723.ece

Government issues licence guidelines for virtual telecom operators

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The entry of VNOs is expected to push down cost of providing telecom services for companies and even give them room for cutting down tariffs.

The Telecom Department on Friday released licence guidelines for virtual network operators, opening the door for new class of players which will act like retailers for telecom service providers.

 

“After considering the recommendations of Trai on VNO, the government has decided to grant Unified Licence VNO (UL VNO),” DoT said in the licence guidelines.

 

The Virtual Network Operators will be entities providing telecom services like mobile landline and internet but only as retailer for full-fledged telecom operators such as BSNL, MTNL and Airtel etc.

 

The entry of VNOs is expected to push down cost of providing telecom services for companies and even give them room for cutting down tariffs.

 

“VNO shall use underutilized telecom infrastructure of national telecom operators. This will reduced cost of ownership on telecom companies to provide telecom services at more affordable rates,” internet firm Bluetown’s Country Managing Director Satya N Gupta said.

 

For obtaining UL VNO, interested companies will need to pay a one-time non-refundable entry fee for authorisation of each service they want to provide and for each service area where they wish to operate.

 

“The total amount of entry fee shall be subject to a maximum of Rs 7.5 crore,” the guidelines said.

AskMe Fin plans payment services for SMEs

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E-commerce marketplace Askme Bazaar plans to help small and medium vendors who are transacting on its site by arranging credit and insurance products for them. These services will be provided via Askme Fin, the groups’ financial services platform. In the last 2-3 months, Askme Fin has helped about 75 SMEs to raise loans from banks and SMEs, Pawan Lohia CEO, Askme Fin, told FE.

AskMe Fin has tied up financial institutions such as Mahindra Finance, Bajaj Finserv, Religare, Capital Float, ICICI Bank, Sme.com and Mandi.com to help SMEs access loans and is in talks with other banks and NBFCs who can lend to vendors.

Anand Sonbhadra, group – CFO of AskMe Fin, said his firm had facilitated disbursements of Rs 30 lakh across 150 merchants till date. The firm hopes to assist 10,000 online and offline merchants raise loans worth around Rs 1,000 crore by the end of March 2017. The average loan size varies from Rs 8-10 lakh, he added.

Askme Pay intends to add 2-3 million merchants. AskMe Pay, the payment platform of AskMe Group will be launched by June and will enable integration of other wallets on its platform. AskMe Pay will largely earn revenue via merchant discount rates and loan referral commissions from lenders, which is the range of 20-30% of the processing fee. Also services related to customer relationship management, marketing and promotional activities will fetch revenue from the merchant, Sonbhadra explained.

According to a TechSci Research Report – India Mobile Wallet Market Opportunities and Forecast, 2020, the mobile wallet market in India is projected to grow to $ 6.6 billion by 2020. A Nielsen report in February adjudged Paytm the most popular mobile wallet followed by Freecharge and MobiKwik, respectively.

Source: http://www.financialexpress.com/article/industry/companies/askme-fin-plans-payment-services-for-smes/265051/

E-comm, tech start-ups seen creating 23% more jobs by Sept

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The e-commerce and tech start-ups domain will see 23.6 per cent growth in jobs between April and September this year, according to the Teamlease Employment Outlook Report.

This is followed by the retail sector, which is set to generate 14.4 per cent more jobs over six months.

The e-commerce sector has created a huge number of jobs in two categories: drivers, who are in demand by taxi aggregator apps/companies; and delivery personnel, hired in large numbers by online shopping websites and apps, the report says.

Blue-collar boost

Other sectors that will ramp up hiring the next six months include healthcare and pharma (14 per cent); telecom (10.13 per cent); FMCG (11.4 per cent), and IT (14.2 per cent).

Core sectors such as manufacturing and engineering, infrastructure, and financial services may, on the other hand, slow down hiring.

While lowering expectations from the Make in India campaign have bogged down the former two industries, the increased use of mobile banking apps and payment apps has had a dwindling effect on job creation in the financial services sector, suggests the report.

Functional front

On the functional front, sales, IT, and blue collar profiles will benefit substantially from the net positive sentiment.

The rush to acquire driving and delivery skills seems to be boosting the blue-collar jobs tremendously. The profile is likely to witness a 9 percentage point increase in demand.

Except Kolkata and Ahmedabad, most of the cities will experience a boost in hiring, says the TeamLease report.

With a 3 percentage point increase in outlook, Pune and Chennai top the hiring projections.

Though hiring is still largely clustered in the metros and Tier 1 cities, tier 2 and 3 cities will also contribute to consumer spending with a boost in organised retail chains and e-commerce.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/ecomm-tech-startups-seen-creating-23-more-jobs-by-sept/article8597590.ece