Congratulations if your start-up's fund raising plan has met
all the six qualifiers necessary under SEBI's proposed
alternative capital raising platform for start-ups/
"new-age" companies (see previous blog that contains Part
1). Now is probably a good time to take stock of the other
regulatory requirements that SEBI is looking to impose under the
alternative platform. Relax- the new requirements are less
stringent! This blog compares the proposed requirements for raising
capital under the alternative capital raising platform with those
that apply under the normal route, i.e. in accordance with SEBI
(ICDR) Regulations, 2009.
What is applicable under the
ICDR Regulations, 2009
What is being proposed under
the alternative capital raising platform for start-ups and
"new age" companies
Need to file draft offer document to
SEBI for comments
Disclosure of the objects of the
Detailed disclosure with information
on the purpose, means of financing the project, proposed deployment
status of the proceeds at each stage of the project, interest of
promoters and directors, etc.
Restricted for broad objects only
Minimum Promoter contribution
20% of post-issue capital
No such minimum requirement
Post Issue lock-in for Promoters & other shareholders
minimum of 20% of Promoter Shares are locked in for 3 years.
Promoter shareholding in excess of 20%) & other pre-issue
capital are locked-in for 1 year
Entire pre-issue capital locked in
for 6 months.
Basis of issue price
Disclosure on the basis of Issue
Price including disclosure on EPS, Diluted EPS, PE Ratio etc.
Disclosure other than projections as
may be deemed fit by the Company.
Apart from the less stringent major regulatory norms mentioned
above, the proposal also provides for less disclosure on
outstanding litigations, material developments & creditors.
In a nutshell, the discussion paper does seem to suggest that
SEBI is serious about its stated intent to make it easier for
"new age companies" and start-ups to access risk capital
from the capital market.
Now it's time for entrepreneurs and indeed, everybody
connected with India's start-up ecosystem to come forward and
offer their suggestions to help SEBI to frame robust regulations
that will encourage companies to raise capital in India at better
Page 9 of the discussion paper specifies the format for
providing comments and suggestions. For details, refer to
Suggestions must reach SEBI on or before April 20, 2015. If you
have any questions, concerns or suggestions, you may send them by
email to email@example.com. You can also
email me your suggestions at firstname.lastname@example.org. I
will compile them and send them to SEBI for its consideration.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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