Innovators growth platform - Good opportunity for startup listing

SEBI notified Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2019 on 5^th April, 2019. SEBI earlier launched ‘Institutional Trading Platform’ for listing of shares of startups which has failed to gain much traction. So, now SEBI has come up with revised version along with relax norms for listing of new-age venture start-ups operating in e-commerce, data analytics, bio-technology and nano-technology sectors to raise funds and get their shares traded on stock exchanges. The name of 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, bio-technology 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 Rs. 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 total gross income of Rs. 50 lakhs annually and who has minimum liquid net worth of Rs. 5 Cr OR Any Body Corporate with 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 meeting 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

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 offer 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.

Time line for listing

The issuer shall list its specified securities on the recognised 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  take  informed  decisions  and  the  disclosures  shall suitably contain the basis of valuation.

One time fees

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 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 recognised stock exchange may at its option migrate to the main board of that recognised stock exchange after expiry of three years from the date of listing subject to compliance with the eligibility requirements of the stock exchange.