SEBI Proposes changes to Innovators Growth Platform framework, for attracting more investors in Startup Ecosystem.
SEBI issues a Consultation Paper to review the Innovators Growth Platform (‘IGP’) framework under ICDR Regulations, inter alia proposes to reduce the period of holding of 25% pre-issue capital by eligible investors to 1 year from the present 2 year requirement, seek comments/views from various stakeholders including start-ups, by January 11, 2021; Apprises that the aforesaid proposal has been made considering that in start-ups which are generally high growth companies, there may be a lot of churn of investors as the start-up goes through various phases, therefore, the 2 year hold period for eligibility to list on IGP may be difficult to meet as eligible investors would want to get regular exits and may get replaced by new investors; Further stating that presently, there is no reservation of shares for QIBs and retail investors as a part of the public issue under IGP, SEBI recommends that the issuer company be allowed to allocate upto 60% of the issue size on a discretionary basis, prior to issue opening, adds that such discretionary allotment may be allowed to all eligible investors as defined under the IGP framework; With a view to expand the universe of family trusts eligible for investing in companies aspiring to list under IGP, suggests – (i) reduction of the net worth requirement of family trusts from Rs. 500 Cr. to Rs. 25 Cr., (ii) including family trusts as a part of Accredited Investors; Further proposes to allow issuer companies seeking listing under IGP to issue Differential Voting Rights/ Superior Voting Rights equity share to promoters / founders, lastly considering that a lower threshold for trigger of open offer would restrict the flexibility of investors to move in and out of investments in start-ups, recommends relaxing the SAST stipulation for triggering open offer from existing 25% to 49%: SEBI
Team- Intellex Strategic Consulting Pvt Ltd
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