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FAQs on Innovators Growth Platform


The Securities and Exchange Board of India (“SEBI”) had, in its circular dated December 12, 2018 reviewed the erstwhile framework for Institutional Trading Platform (“ITP”) and proposed modifications to the existing guidelines of ITP including a change of name to Innovators Growth Platform (“IGP”).

The major changes were pertaining to eligibility criteria for companies to list on the platform, minimum application size and no. of allottees, allocation criteria to investors, trading lot and migration to the mainboard. A summary of the key changes is provided below for ease of reference.

Institutional Trading Platform (with IPO)

Applicability

Company with intensive use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology in their businesses

Atleast 25% of the pre-issue capital of the company shall be held by Qualified Institutional Buyers

Or

Any other company with atleast 50% of its pre-issue capital held by Qualified Institutional Buyers

Investor Allocation

  1. 75% to Institutional Investors with no separate allocation for anchor investors
  2. 25% to Non-institutional Investors

The allotment to Institutional Investors may be on a discretionary or a proportionate basis whereas the allotment to Non-institutional Investors shall be on a proportionate basis

In case of discretionary allotment to Institutional Investors, no Institutional Investor shall be allotted more than 10% of the issue size.

Investment Parameters

  • Min Allottees in IPO – 200
  • Min Application size - INR 10 Lakhs
  • Min Trading lot size – INR 10 Lakhs

Innovators Growth Platform (with IPO)

Applicability

Company with intensive use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology in their businesses

Atleast 25% of the pre-issue capital of the Issuer shall be held by a set of investors (as detailed in Annexure-I) for a period of minimum 2 (two years)

 

 

Investor Allocation

The allotment to Institutional Investors as well as Non-institutional investors shall be on a proportionate basis.

Any under-subscription in the Non-institutional Investor category shall be available for subscription under the Institutional Investors’ category.

 

 

 

Investment Parameters

  • Min Allottees in IPO – 50
  • Min Application size - INR 2 Lakhs
  • Min Trading lot size - INR 2 Lakhs

The final guidelines for IGP were released vide the Amended ICDR dated April 05, 2019 and can be referred here.

ICDR Guidelines IGP (.pdf)

For detailed comparison, the erstwhile ITP Regulations can be referred here.

SEBI ITP Regulations (.pdf)

All the investors eligible to participate in the capital markets can invest in the securities listed on the IGP. However, the platform is meant for sophisticated and informed investors as indicated by the minimum trading lot size of INR 2,00,000 (Rupees Two Lakh Only).

Most of the PE/VCs which are active in the start-up ecosystem along with the individual investors/HNIs investing directly/indirectly though angel networks will be eligible to invest in the securities listed on the IGP.

The minimum lot size for trading in securities will be INR 2,00,000 (Rupees Two Lakh Only).

Accredited Investors are a new set of investor category introduced by SEBI in the IGP guidelines with an intent to include investments made by individual investors, HNIs, super angels etc. in the companies as part of the minimum institutional holding criteria.

For the purpose of IGP, the following entities shall be eligible to be considered as AIs:

  1. Any individual with total gross income of INR 5,000,000 (Rupees fifty lakhs only) annually and who has minimum liquid net worth of INR 50,000,000 (Rupees five crores only); or
  2. Anybody corporate with net worth of INR 250,000,000 (Rupees twenty five crores)

Not more than 10% of the pre-issue capital may be held by Accredited Investors which will form a part of the minimum 25% holding requirement by the investor categories mentioned in the IGP guidelines.

For accreditation as an Accredited Investor (AI) for the purpose of IGP, the investor having a demat account with a Depository shall submit the following key documents with the Exchanges/Depositories or Brokers/Depository Participants:

  1. Copy of PAN Card.
  2. Copy of Aadhaar Card or Copy of Valid Passport.
  3. Income tax return of last 3 financial years.
  4. Certificate from practicing chartered accountant stating total gross income (annually) and liquid net worth as on date of application. Working of Liquid Net worth shall be given as an Annexure to the certificate.

The detailed requirement of documents/declarations from the investors for the accreditation process is mentioned in checklist documents below.

Download Checklist for accreditation in case of Individual/HUF (.docx)

Download Checklist for accreditation in case of Body Corporate (including LLP) (.docx)

The working of Liquid Net worth shall be as follows;

  1. Capital + Free Reserves

Less:

  1. Non-allowable assets which include the following
    1. Fixed assets
    2. Pledged Securities
    3. Non-allowable securities (unlisted securities)
    4. Doubtful debts and advances (Includes debts/advances overdue for more than three months or given to associates and to related parties)
    5. Prepaid expenses, losses
    6. Intangible assets
    7. 30% value of marketable securities

The detailed working will be given as an Annexure to the certificate

The accreditation granted by the Stock Exchange/Depository shall be valid for a period of three years from the date of issue of such accreditation.

The accreditation criteria will be re-ascertained after the expiry of 3 (three) years

In case the AI becomes ineligible due to change in his/her/its financial status in which case such AI shall inform the Stock Exchange/Depository of such ineligibility.

No, Unlike in the case of listing on the SME exchange, market making is not mandatory for listing on the IGP.

No. The guidelines allow a company to list on IGP both with IPO and without IPO with separate set of guidelines for each. Hence, listing on IGP does not require the company to mandatorily undertake an IPO.

In case of listing with an IPO, the issuer shall be in compliance with minimum public shareholding requirements specified in the Securities Contract (Regulations) Rules, 1957

while the minimum offer size shall be INR 100,000,000 (Rupees ten crore only).

As per the SEBI Amended ICDR dated April 05, 2019, following is the eligibility norms for a company to be listed on the IGP.

“An issuer which is intensive in the use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology to provide products, services or business platforms with substantial value addition shall be eligible for listing on the innovators growth platform, provided that as on the date of filing of draft information document or draft offer document with the Board, as the case may be, twenty five per cent of the pre-issue capital of  the Issuer Company for at least a period of two years, should have been held by:

  1. Qualified Institutional Buyers;
  2. Family trust with net-worth of more than INR 5,000,000,000 (Rupees five hundred crore only), as per the last audited financial statements;
  3. Accredited Investors for the purpose of Innovators Growth Platform*;
  4. The following regulated entities:
    1. Category III Foreign Portfolio Investor;
    2. An entity meeting all the following criteria:
      1. It is a pooled investment fund with minimum assets under management of USD 150 mn (USD one hundred and fifty million only);
      2. It is registered with a financial sector regulator in the jurisdiction of which it is a resident;
      3. It is resident of a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to Bilateral Memorandum of Understanding with the Board;
      4. It is not resident in a country identified in the public statement of Financial Action Task Force as:
        1. a jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply; or
        2. a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies.

*Not more than ten per cent of the pre-issue capital may be held by Accredited Investors

For the purpose of accreditation: The persons /corporate bodies who wish to get accreditation for the purpose of innovators growth platform, shall approach the stock exchanges or depositories and follow the procedures prescribed by the Board and / or such stock exchange or depository for the purpose of accreditation as an Accredited Investor, from time to time.

As per the eligibility norms for listing on the IGP, there is no specific criteria for date of incorporation of a company or history of business operations to be eligible for listing on IGP.

However, the eligibility criteria stipulates atleast 25% of pre-issue capital of the company to be held by a certain set of investors for a minimum of 2 years.

Hence, a company needs to complete atleast 2 years of operations since its incorporation to be eligible for listing its securities on the IGP.

A company can list only its specified securities on the IGP. ‘Specified securities’ for the purposes of IGP mean equity shares and convertible securities. Most of the start-ups while raising capital issue preference shares and convertible instruments which are converted to equity shares in the future based on certain performance milestones and/or event triggers.

There are no specific categories of entities which are exempted from the aforesaid eligibility norms of listing.

However, companies which doesn’t fall under the definition of technology-driven companies as per the guidelines won’t qualify for listing on IGP.

The entire pre-issue capital of the shareholders shall be locked-in for a period of 6 (six) months from the date of allotment in case of listing pursuant to a public issue or date of listing in case of listing without a public issue with the exceptions/qualifications which are provided below:

  1. equity shares allotted to employees, whether currently an employee or not, under an employee stock option or employee stock purchase scheme of the issuer prior to the initial public offer, if the issuer has made full disclosures with respect to such options or scheme in accordance with Part A of Schedule VI;
  1. equity shares held by an employee stock option trust or transferred to the employees by an employee stock option trust pursuant to exercise of options by the employees, whether currently employees or not, in accordance with the employee stock option plan or employee stock purchase scheme. 
  1. Provided that the equity shares allotted to the employees shall be subject to the provisions of lock-in as specified under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. 
  1. equity shares held by a venture capital fund or alternative investment fund of Category I or a foreign venture capital investor:  Provided that such equity shares shall be locked-in for a period of at least one year from the date of purchase by the venture capital fund or alternative investment fund or foreign venture capital investor.

equity shares held by persons other than the promoters, continuously for a period of at least one year prior to the date of listing in case of listing without a public issue.

The issuer shall be in compliance with minimum public shareholding requirements specified in the Securities Contracts (Regulation) Rules, 1957 incase of listing with an IPO. For companies listing their securities without an IPO, the minimum public shareholding shall not be applicable.

The minimum offer size in case of listing with IPO shall be INR 100,000,000 (Rupees ten crores only).

The minimum application size for subscribing to the public offer of a company listing on IGP shall be INR 2,00,000 (Rupees two lakh only) and in multiples thereof incase of a company listing its securities on IGP with an IPO.

The minimum trading lot on the stock exchange shall be INR 2,00,000 ( Rupees two lakh rupees) and in multiples thereof. This will be applicable for trading in securities of companies coming though both with an IPO and without an IPO.

The number of allottees in the initial public offer shall at least be fifty. All the category of investors who are eligible to participate in the main board can invest and/or trade in IGP securities.

The allotment to institutional as well as non-institutional investors shall be on a proportionate basis provided that there shall be no separate allocation for anchor investors.

Any under-subscription in the non-institutional investor category shall be available for subscription under the institutional investors’ category.

An issuer seeking to issue and list its specified securities shall file a draft offer document along with necessary documents with SEBI in accordance with these regulations along with the necessary fees.

The draft offer document shall disclose the broad objects of the issue.

The basis of issue price shall include disclosures, except projections, as deemed fit by the issuer in order to enable the investors to take informed decisions and the disclosures shall suitably contain the basis of valuation.

Usually companies work with a merchant banker and a legal firm to prepare and finalize the offer document along with the all relevant disclosures/declarations/legal submissions.

An issuer seeking listing of its specified securities without making a public offer, shall file a draft information document along with the necessary documents with SEBI in accordance with these regulations along with the stipulated fee.

The draft information document shall contain disclosures as specified for the draft offer documents in these regulations.

The regulations relating to the following as stated under the Chapter of Initial Public Offer (Amended ICDR, April 2019) on Main Board shall not be applicable:

  1. allotment
  2. issue opening or closing
  3. advertisements
  4. underwriting
  5. sub-regulation (2) of regulation 5  
  6. pricing
  7. dispatch of issue material
  8. other such provisions related to offer of specified securities to the public.

Provisions relating to minimum public shareholding shall not be applicable.

The issuer shall obtain an in-principle approval from the stock exchanges on which it proposes to get its specified securities listed. 

The issuer shall list its specified securities on the recognised stock exchange(s) within thirty days: 

  1. from the date of issuance of observations by the Board; or
  2. from the expiry of the stipulated period if the Board has not issued any such observations

A company proposing to list on IGP is neither required to have its proposed issue underwritten by an underwriter nor is it required to have a dedicated market maker to provide liquidity to the investors.

An issuer whose specified securities are traded on the IGP without making a public issue may exit from that platform, if

  1. Its shareholders approve such an exit by passing a special resolution through the postal ballot where 90 (ninety per cent) of the total votes and the majority of non-promoter votes have been cast in favor of such proposal; and
  2. The recognized stock exchange where its shares are listed approves of such an exit.

The recognized stock exchange may delist the specified securities of an issuer listed without making a public issue upon non-compliance of the conditions of listing and in the manner as specified by the stock exchange.

In case of a company delisted and permanently removed from the platform, no company promoted by promoters and directors of such delisted company shall be permitted to be listed on the IGP for a period of 5 years from the date of such delisting. These provisions shall not apply to a company promoted by the independent directors of such a delisted company.

Updated on: 11/03/2020 12:00
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