Innovators Growth Platform – Good Opportunity For Startup Listing By CS Dhaval Gusani


SEBI notified the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2019 on 5th April, 2019. SEBI earlier launched ‘Institutional Trading Platform’ for a listing of shares of startups which has failed to gain much traction. So, now SEBI has come up with revised version along with relaxing norms for listing of new-age venture start-ups operating in e-commerce, data analytics, biotechnology, and nano-technology sectors to raise funds and get their shares traded on stock exchanges. The name of the platform is changed from 'Institutional Trading Platform' to 'Innovators Growth Platform'. This platform shall be accessible by institutional investors, non-institutional investors and retail individual investors. Earlier, retain individual investors are not allowed to access.
 
Eligibility for Issue of Securities
 
Any issuer company which is intensive in the use of technology, information technology, intellectual property, data analytics, biotechnology or nano-technology to provide products, services or business platforms with substantial value addition, shall be eligible for listing on the innovators' growth platform. Provided that as on the date of filing of draft information document or draft offer document with the Board, 25 % of the pre-issue capital of the Issuer Company for at least a period of 2 years, should have been held by:
 
I. Qualified Institutional Buyers (QIB); OR
 
II. Family trust with net-worth of more than 500 Cr. as per the last audited B/S; OR
 
III. Accredited Investors for the purpose of Innovators Growth Platform; OR
 
The following individuals or entities shall be eligible to be considered as accredited investors:
 
Any individual with a total gross income of Rs. 50 lakhs annually and who has a minimum liquid net worth of Rs. 5 Cr OR Any Body Corporate with the net worth of Rs. 25 Cr; However, not more than 10 % of the pre-issue capital may be held by Accredited Investors.
 
IV. The following regulated entities:
 
⇒ Category III Foreign Portfolio Investor;
 
⇒ An entity meets all the following criteria:
 
  • It is a pooled investment fund with minimum assets under management of 150 million USD;
  • It is registered with a financial sector regulator in the jurisdiction of which it is a resident;
  • It is resident of a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to Bilateral Memorandum of Understanding with the Board;
  • It is not resident in a country identified in the public statement of Financial Action Task Force as:
a) a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or

b) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.
 
LISTING WITHOUT IPO
 
An issuer seeking listing of its specified securities without making a public offer shall file a draft information document along with the necessary documents with the Board in accordance with these regulations along with the fee as specified in Schedule III of ICDR regulations. The draft information document shall contain disclosures as specified for the draft offer documents in ICDR regulations as specified in Part A of Schedule VI.
 
One time fees
 

Paid up Share Capital

Fees

Less than or equal to Rs. 10 Crore

Rs. 1,00,000/-

Between Rs. 10 Crore to Rs. 5000 Crore

0.1 % of the issue size

More than Rs. 5000 Crore

Rs. 5 Crore + 0.025 of the issue size in excess of Rs. 5000 Crore

 
Non–applicability of certain regulations

The regulations relating to the following as stated under the Chapter of Initial Public Offer on
Main Board shall not be applicable:
 
a) Allotment;
b) Issue opening or closing;
c) Advertisements;
d) Underwriting;
e) Sub-regulation (2) of regulation 5;
f) Pricing;
g) Dispatch of issue material; and
h) Other such provisions related to the offering of specified securities to the public.
 
In-principle approval from Stock Exchange
 
The issuer shall obtain in-principle approval from the stock exchanges on which it proposes to get its specified securities listed.
 
Minimum Public Shareholding
 
The issuer which has received an in-principle approval from the stock exchange for listing of its specified securities, shall be deemed to have been waived by the Board from the requirement of minimum offer to the public as per the provisions of clause (b) of sub-rule (2) of rule 19 of Securities Contracts (Regulation) Rules, 1957 for the limited purpose of listing on the innovators growth platform.
 
Information Document
 
The draft and final information document shall be approved by the board of directors of the issuer and shall be signed by all directors, the Chief Executive Officer, the Managing Director or Manager within the meaning of the Companies Act, 2013 and the Chief Financial Officer, i.e., the Whole time Finance Director or any other person heading the finance function and discharging that function.
 
The signatories shall also certify that all disclosures made in the information document are true and correct.
 
In case of mis-statement in the information document or any omission therein, any person who has authorized the issue of information document shall be liable in accordance with the provisions of the Act and regulations made thereunder.
 
A timeline for listing
 
The issuer shall list its specified securities on the recognized stock exchanges within 30 days from the date of issuance of observations by the Board; or from the expiry of the period stipulated in sub-regulation (4) of regulation 25 if the Board has not issued any such observations.
 
LISTING WITH IPO
 
An issuer seeking to issue and list its specified securities shall file a draft offer document along with necessary documents with the Board in accordance with ICDR regulations along with the fees as specified in Schedule III of these regulations.
 
The draft offer document shall disclose the broad objects of the issue, the basis of issue price which shall include disclosures, except projections, as deemed fit by the issuer in order to enable the investors to make informed decisions and the disclosures shall suitably contain the basis of valuation.
 
One time fees
 

Size of the issue

Fees

Less than or equal to Rs. 10 Crore

Rs. 1,00,000/-

Between Rs. 10 Crore to Rs. 5000 Crore

0.1 % of the issue size

More than Rs. 5000 Crore

Rs. 5 Crore + 0.025 of the issue size in excess of Rs. 5000 Crore

 
Minimum Offer Size
 
The minimum offer size shall be Rs. 10 Cr.
 
Minimum Application Size
 
The minimum application size is Rs. 2 lakh and in multiples thereof.
 
Minimum Number of Allottees
 
The minimum number of allottees shall be at least 50.
 
Allotment on a proportionate basis
 
The allotment to institutional investors as well as non-institutional investors shall be on a proportionate basis.
 
Lock-in period
 
The entire pre-issue capital of the shareholders shall be locked-in for a period of 6 months from the date of allotment in case of listing pursuant to a public issue or date of listing in case of listing without a public issue.
 
Trading lot
 
The minimum trading lot on the stock exchange shall be Rs. 2 lakh.
 
Migration to the main board
 
An issuer that has listed its specified securities on a recognized stock exchange may at its option migrate to the main board of that recognized stock exchange after the expiry of three years from the date of listing subject to compliance with the eligibility requirements of the stock exchange.

Click here to read the disclaimer


Write a Comment