Sebi okays IPO-less listing rules for SMEs

SEBI has notified new norms for listing of start-ups and small and medium enterprises on stock exchanges without having to make initial public offers (IPOs). SEBI has made amendments of rules to permit listing of start-ups and SMEs in institutional trading platform (ITP) without having to make an IPO. Lack of exit opportunities for existing investors and restricted access to new investors is a problem for start-ups and SMEs. SEBI said in a circular that the minimum amount for trading or investment on the ITP would be Rs 10 lakh.

The move is aimed at providing easier exit options for entities like angel investors, venture capital funds and PEs. It will also give better visibility, wider investor base and greater fund raising capabilities to such companies. SEBI said the company would not make an IPO while its specified securities are listed on ITP but can raise capital through private placement or rights issue ‘without an option for renunciation of rights’.