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SEBI’s review over IGP framework & other issues 

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SEBI eases listing norms to help start-ups attract big investorsOn March 25, 2021, the Securities and Exchange Board of India(SEBI) decided to introduce many relaxations to the framework of Innovators Growth Platform (IGP) to help start-up and made some amendments to SEBI regulations such as Delisting of Equity Shares and Alternative Investment Funds.

Innovators Growth Platform(IGP):

  • It is a revised version of ‘Institutional Trading Platform’ for a 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.
  • This platform shall be accessible by institutional investors, non-institutional investors and retail individual investors.

Proposals approved in Framework of IGP under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018:

FrameworkExistingApproved to Modify
Eligibility requirement for IssuersThe issuer should have 25% of pre-issue capital held by eligible investors for 2 YEARSIt is reduced to 1YEAR
Pre-issue shareholding of IGP investors (Accredited Investor renamed as IGP investors)10%25%
Allotment by the Issuer companyNot permitted discretionary allotmentCan allocate 60% of the issue size on a discretionary basis (with a lock-in of 30 days on such shares), prior to the issue opening to eligible investors.
Open offer threshold limit to companies under IGP-list25%49%
Criteria for acceptance of Delisting1.If the post-offer shareholding, with the shares tendered and accepted, reaches 75% of the total issued shares of that class and

2.At least 50% shares of the public shareholders are tendered and accepted.

 Migration from IGP to main BSE/NSE platforms (% of capital to be held by qualified institutional buyers)75%50%

For delisting under the IGP framework, the Reverse Book Building mechanism shall not be applicable, and for computation of offer price, the floor price will be determined in terms of Takeover Regulations, 2011, along with delisting premium as justified by the acquirer/promoter.

Note – Open offer is a secondary market offering, the open offer allows stakeholders of a company to buy shares/stocks at a lower price when compared to the stock’s prevailing market price.

Amendments to SEBI (Delisting of Equity Shares) Regulations, 2009 

  • Promoter/acquirer is required to disclose their intention to delist the company by making an initial public announcement and
  • They are permitted to specify an indicative price for delisting which shall not be less than the floor price.

 Amendment to SEBI (Alternative Investment Funds) Regulations, 2012

  • Provided flexibility to Venture Capital Funds registered under Category I Alternative Investment Funds (AIFs) in making investments
  • SEBI has allowed angel investors to invest in start-ups.

Eligible investors
Eligible investors here include qualified institutional buyers, family trusts with a minimum net worth of Rs 500 crore, and foreign portfolio investors and so on.

Accredited investors or IGP Investors
Accredited investors are individuals with a net worth above Rs 5 crore and income above Rs 50 lakh and corporate entities with a minimum net worth of Rs 25 crore.

Recent Related News:

On February 2, 2021, the Securities and Exchange Board of India (SEBI) has released the guidelines to set up Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds(MFs). As per the guidelines, AMCs needs to contribute Rs 150 crore towards the share capital of LPCC.

About Securities and Exchange Board of India (SEBI):

Establishment – 1992
Headquarters – Mumbai, Maharashtra
Chairman – Ajay Tyagi