In a move to help entrepreneurs and create more jobs Securities and Exchange Board of India (SEBI) decided to make change in disclosure norms. These are the norms which requires you to disclose all the information which may effect investors decision. This will help startups to raise fund and grow faster.
The most common problem for startups is funding. The move to ease norms may bring the light to the path to achieve funding goals and may drive the success of the startup companies, which can create more jobs and bring economy to the new levels.
The new norms eased relaxations for the companies which works in the areas of IT, data analytics, intellectual property, bio-technology or nano-technology related areas. This will help the companies to get listed on separate Institutional Trading Platform. This is specialised platform designed for SMEs. You can read about them here.
SEBI opened this for institutional investors and HNI(High Networth Individuals), as want to safeguard investors against higher risk of investment in this case. Under the new platform the promoter holding is locked for only six years while in case of main platform it is three years. Startus may not disclose how they will use the fund or other details like group of companis , litigation. The minimum investment lot is 10 lac , as sebi want only big players to invest. Later startup can graduate to main platform and small investors can invest also.
The idea is simple. Create a new platform for new entities and ease the norms which are implemented in general. Once new entity is mature enough, one can move on. There are also norms for delisting and exiting.
I created this small article in layman language so everybody can understand. I would suggets you can head over to following links for more specific insights.
- http://yourstory.com/2015/07/sebi-sme-funds-misuse/ (Don`t part of public`s money, PLZ!!!!)