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SEBI Proposes Changes To Innovators Growth Platform Framework, For Attracting More Investors In Startup Ecosystem.

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

Startupstreets.com , Intellexconsulting.com

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