IndiaTech to pitch for change in listing norms for new-age startups
IndiaTech, an advocacy platform for consumer internet companies, is in the process of submitting a white paper to the Securities and Exchange Board of India (SEBI), NITI Aayog and the Ministry of Corporate Affairs with regard to the listing norms for startups.
The paper will request modifications in the requirements taking into account the number of years of existence, annual turnover and nature of business, for ease of going public by high-growth internet companies which have raised multiple rounds of private capital.
IndiaTech, which counts companies like MakeMyTrip and Ola and investors like Matrix Partners and Steadview Capital as members, is likely to come up with the submission as early as Wednesday, said the spokesperson for IndiaTech.
“The eventual target is to see policy movement but the submission will open up discussions around the issue,” said Priyanka Mathur, manager-policy at IndiaTech.
The development was first reported by The Economic Times.
At present, the norms for public listing requires companies to show profitability for a minimum of three years and promoters are required to have a shareholding of at least 20% in the company, among other mandatory compliance requirements.
SEBI had also discussed relaxations for new-age ventures to list on the stock markets during a board meeting in December, renaming this initiative as Innovators Growth Platform.
“These are meant for early-stage companies and may not be most suitable to address the needs of high-growth companies which have high valuations,” said Mathur.
In its submission, IndiaTech is also going to bring up the issue of differential voting rights for founders which allows companies to raise capital without diluting voting rights and preventing a hostile takeover by investors.
This concern has previously been voiced by Ola chief executive Bhavish Aggarwal, MakeMyTrip’s Deep Kalra and Flipkart co-founder Sachin Bansal, who was a part of IndiaTech at its conception before he dissociated himself from the group.