Additional Topics (Chapter 4)

INNOVATORS GROWTH PLATFORM

Who can get their securities listed on IGP?
Innovators growth platform” means the trading platform for listing and trading of specified securities of issuers
that comply with the eligibility criteria specified in regulation 283 of SEBI (ICDR), 2018.
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Listing on Innovators Growth Platform (IGP)
Aimed to list start ups which are intensive in the use of technology, information technology, intellectual property,
data analytics, bio-technology or nano-technology to provide products, services or business platform.
At least 25% of pre-issue capital is held by QIBs, Innovators Growth Platform Investors, any other class of inves-
tors as specified by SEBI for atleast a 1 year.
Listing is allowed with or without IPO. SEBI will issue its observations in both the cases.
The minimum offer size shall be ten crore rupees in case of IPO.
Minimum application size shall be two lakh rupees and in multiples thereof.
Number of allottees in the initial public offer shall at least be fifty.
Minimum trading lot shall be two lakh rupees and in multiples thereof.

Securities Ineligible for Minimum Promoters’ Contribution

2 (a) Specified securities acquired during the preceding three years, if these are:- • acquired for consideration
other than cash and revaluation of assets or capitalisation of intangible assets is involved in such transaction;
or • resulting from a bonus issue by utilisation of revaluation reserves /unrealised profits of the issuer/from
bonus issue against equity shares which are ineligible for minimum promoters’ contribution
(b) (b) specified securities acquired by promoters and AIFs/ FVCIs / scheduled commercial banks/ PFIs/ insur-
ance companies during the preceding one year at a price lower than the price at which specified securities
are being offered to public in the initial public offer.
(c) c) promoters and AIFs during the preceding one year at a price less than the issue price, against funds
brought in by them during that period, in case of an issuer formed by conversion of one or more partnership
firms/LLPs, where the partners of the erstwhile partnership firms/ LLPs are the promoters of the issuer and
there is no change in the management.
(d) specified securities pledged with any creditor.

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Security Deposit
The issuer shall, before the opening of the subscription list, deposit with the stock exchange or stock exchanges
an amount calculated at the rate of 1% of the amount of the issue size available for subscription to the public in
the manner as may be specified by the SEBI and the amount so deposited shall be refundable or forfeitable in the
manner specified by the SEBI.

Prohibition on payment of incentives

4 Any person connected with the issue shall not offer any incentive, whether direct or indirect, in any manner,
whether in cash or kind or services or otherwise to any person for making an application in the initial public
offer, except for fees or commission for services rendered in relation to the issue.
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Who is not eligible to do it? What are the conditions to do it?

Right issue by # if the issuer, any of its promoters, promoter group or directors of the issuer # application to SE to seek in-principle approval for listing.
a listed issuer are debarred from accessing the capital market by the SEBI; # all its existing shares have been fully paid-up or have been forfeited;
# if any of the promoters or directors of the issuer is a promoter or director of # it has made firm arrangements of finance through verifiable means towards
any other company which is debarred from accessing the capital market by the seventy five per cent. of the stated means of finance for the specific project
SEBI. proposed, excluding the amount to be raised through the proposed issue or
# if any of its promoters or directors is a fugitive economic offender. through existing identifiable internal accruals.
# The amount for general corporate purposes, shall not exceed twenty-five
percent of the amount raised by the issuer.
Bonus issue # authorized by AOA.
by a listed # not defaulted in payment of interest or principal;
issuer # not defaulted in respect of the payment of statutory dues of the employees.
# any outstanding partly paid shares on the date of the allotment of the bonus
shares, are made fully paid-up;
# any of its promoters or directors is not a fugitive economic offender.
Preferential # shall not be made to any person who has sold or transferred any equity shares # all equity shares allotted shall be fully paid up at the time of the allotment;
issue by a of the issuer during last six months. a special resolution has been passed.
listed issuer # Where any person belonging to promoter(s) or the promoter group has previ- # all equity shares held by the proposed allottees in the issuer are in demateri-
ously subscribed to warrants of an issuer but has failed to exercise the war- alised form;
rants, the promoter(s) and promoter group shall be ineligible for issue of speci- # the issuer is in compliance with the conditions for continuous listing.
fied securities of such issuer on preferential basis for a period of one year. # the issuer has obtained the Permanent Account Numbers of the proposed
# any of its promoters or directors is a fugitive economic offender. allottees, except those exempted.
Qualified In- An issuer shall be eligible to make a qualified institutions placement if any of # a special resolution has been passed.
stitutional its promoters or directors is not a fugitive economic offender. # The allotment pursuant to the special resolution shall be completed within a
Placement by period of 365 days from the date of passing of the resolution.
a listed issuer # the equity shares of the same class, which are proposed to be allotted through
qualified institutions placement have been listed for a period of at least one
year.
# All eligible securities issued through a qualified institutions placement shall
be listed on the recognised stock exchange where the equity shares of the issu-
er are listed.
# The issuer shall not make any subsequent qualified institutions placement
until the expiry of two weeks from the date of the prior qualified institutions
placement made.
IPO of Indian An issuer shall be eligible to make an issue of IDRs only if:
Depository # the issuing company is listed in its home country for at least three PY.
Receipts # the issuer is not prohibited to issue securities by any regulatory body;
# the issuer has a track record of compliance with the securities market regula-
tions in its home country;
# any of its promoters or directors is not a fugitive economic offender.

The issue shall be subject to the following conditions:

# issue size shall not be less than fifty crore rupees;
# issuer shall ensure that the underlying shares of IDRs shall rank pari passu
with the existing shares of the same class.

The issuer shall ensure that

# it has made an application to SE for in-principle approval for listing of the
IDRs.
# it has entered into an agreement with a depository for dematerialisation of the
IDRs proposed to be issued;
# it has made firm arrangements of finance through verifiable means towards
seventy five per cent. of the stated means of finance for the project proposed to
be funded from issue proceeds, excluding the amount to be raised through the
proposed issue of IDRs or through existing identifiable internal accruals.
# The amount for general corporate purposes, as mentioned shall not exceed
twenty five per cent. of the amount being raised by the issuer.
IPO by SME if the issuer, any of its promoters, promoter group or directors are debarred # it has made an application to SE for listing on such SME exchange.
from accessing the capital market by the SEBI; # it has entered into an agreement with a depository for dematerialisation of its
# if any of the promoters or directors of the issuer is a promoter or director of specified securities already issued and proposed to be issued;
any other company which is debarred from accessing the capital market by the # all its existing partly paid-up equity shares have either been fully paid-up or
SEBI; forfeited;
# if the issuer or any of its promoters or directors is a wilful defaulter. # all specified securities held by the promoters are in the dematerialised form;
# if any of its promoters or directors is a fugitive economic offender. # it has made firm arrangements of finance through verifiable means towards
seventy five per cent. of the stated means of finance for the project proposed to
Eligibility requirements be funded from the issue proceeds, excluding the amount to be raised through
# An issuer shall be eligible to make an initial public offer only if its post-issue the proposed public offer or through existing identifiable internal accruals.
paid-up capital is less than or equal to ten crore rupees.
# An issuer, whose post issue face value capital is more than ten crore rupees
and upto twenty five crore rupees, may also issue specified securities in ac-
cordance with provisions of this Chapter.
# An issuer may make an initial public offer, if it satisfies track record and/or
other eligibility conditions of the SME Exchange(s) on which the specified
securities are proposed to be listed.
What is SR Equity shares?
“SR equity shares” means the equity shares of an issuer having superior voting rights compared to all other eq-
uity shares issued by that issuer. 6
Provision for SR Equity Shares:
 The issuer shall be 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 sub-
stantial value addition.

 the SR shareholder shall not be part of the promoter group whose collective net worth is more than rupees
500 crores: (Explanation: While determining the collective net worth, the investment of SR shareholder in
the shares of the issuer company shall not be considered.)

 The SR shares were issued only to the promoters/ founders who hold an executive position in the issuer
company;

The issue of SR equity shares had been authorized by a special resolution passed at a general meeting of the
shareholders of the issuer, where the notice calling for such general meeting specifically provided for

a. the size of issue of SR equity shares,

b. ratio of voting rights of SR equity shares vis-à-vis the ordinary shares,

c. rights as to differential dividends, if any

d. sunset provisions, which provide for a time frame for the validity of such SR equity shares,

e. matters in respect of which the SR equity shares would have the same voting right as that of the ordinary
shares,

 The SR equity shares shall have voting rights in the ratio of a minimum of 2:1 up to a maximum of 10:1 com-
pared to ordinary shares and such ratio shall be in whole numbers only;

 The SR equity shares shall have the same face value as the ordinary shares;

 The issuer shall only have one class of SR equity shares;

 The SR equity shares shall be equivalent to ordinary equity shares in all respects, except for having superior
voting rights.

 The total voting rights of SR shareholders (including ordinary shares) in the issuer upon listing, pursuant to an
initial public offer, shall not at any point of time exceed seventy four per cent.

 The SR equity shares shall be converted into equity shares having voting rights same as that of ordinary
shares on the fifth anniversary of listing of ordinary shares of the listed entity: Provided that the SR equity
shares may be valid for upto an additional five years, after a resolution to that effect has been passed, where
the SR shareholders have not been permitted to vote: Provided further that the SR shareholders may convert
their SR equity shares into ordinary equity shares at any time prior to the period as specified in this sub-
regulation.
 The SR equity shares shall be compulsorily converted into equity shares having voting rights same as that of ordinary shares
on the occurrence of any of the following events

 demise of the promoter(s) or founder holding such shares;

 an SR shareholder resigns from the executive position in the listed entity;
 merger or acquisition of the listed entity having SR shareholder/s, where the control would no longer remain with the
SR shareholder/s;
 the SR equity shares are sold by an SR shareholder who continues to hold such shares after the lock-in period but prior
to the lapse of validity of such SR equity shares.

Points to Know:
SR Equity shares shall be considered for promoters’ contribution.
The SR equity shares shall be under lock in until conversion into equity shares having voting rights same as
that of ordinary shares.
Where the issuer has issued SR equity shares to its promoters or founders, then such a SR shareholder shall
not renounce their rights and the SR shares received in a rights issue shall remain under lock-in until
conversion into equity shares having voting rights same as that of ordinary equity shares along with

If an issuer has issued SR equity shares to its promoters or founders, any bonus issue on the SR equity
shares shall carry the same ratio of voting rights compared to ordinary shares and the SR equity shares
issued in a bonus issue shall also be converted to equity shares having voting rights same as that of

Where the listed company has outstanding SR equity shares, at least half of the board of directors shall
comprise of independent directors.
Two-thirds of the members of audit committee shall be independent directors and in case of a listed entity
having outstanding SR equity shares, the audit committee shall only comprise of independent direc-

at least fifty percent of the directors shall be independent directors and in case of a listed entity having out-
standing SR equity shares, two thirds of the nomination and remuneration committee shall comprise of

At least three directors, with at least one being an independent director, shall be members of the
Committee and in case of a listed entity having outstanding SR equity shares, at least two thirds of the

The majority of members of Risk Management Committee shall consist of members of the board of direc-
tors and in case of a listed entity having outstanding SR equity shares, at least two thirds of the Risk