The Securities and Exchange Board of India (SEBI), is likely to exempt startups from lock-in period clauses while listing on the stock exchanges.
The exemption will facilitate the startups to sell shares to the public through the proposed alternative capital-raising platform from the mandatory promoter’s holding lock-in period, enabling to raise funds easier and, also investor exits.
Under the existing norms, a minimum 20% (post-issue capital) of promoter’s contribution is locked in for three years from the date of commercial production or date of allotment in public issue.
The newly proposed listing norms with regard to the exemption of lock-in period for promoter’s holding will help the startups to access to capital in India by selling the shares. This will allow the investors to exit their holdings easily as well as draw the attention of new investors without getting their investment locked in for a given period.
Furthermore, the exemptions will also enable initial investors of startups an opportunity to sell their holdings.
The final listing guideline for startups is expected to be announced by next month.