Despite having a good year for the debutant Indian companies in the market, the Securities and Exchange Board of India (SEBI), tightens the rules for IPOs. This year Indian companies have raised ₹1.9 trillion in IPOs but also increased the volatility of the Indian stock markets.
SEBI addressed some of the regulatory gaps that allowed the start-ups to enter the Indian exchanges with a track record of profit and low founders’ stakes. According to the new rules shareholders with more than 20 per cent stakes in the company, cannot sell their entire holding on listing day, whereas they can sell 50 per cent of the stakes on the listing. This way the shareholders cannot sell their entire holding through offer-for-sale (OFS), which can save the retail investors from a crisis of confidence.
The Indian market regulators also tightened disclosure norms for the companies. Apart from that, rating agencies will also monitor the funds that are being used.
