SEBI is looking to discuss certain insider trading regulation & key performance indicator KPI that should be added for investors considerations. The market regulators will seek detailed disclosures on IPO prices, pre IPO sales, and private investor. Detailing how these KPI will contribute to the business will help investor make informed decision.
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SEBI Indian Startup
The Securities & Exchange Board of India SEBI seek to strengthen the IPO disclosure rules of Indian startup. According to a Business Standard report, SEBI board will meet on September 30, 2022 to discuss certain regulation on insider trading and key performance indicator KPI that need to be added for investor considerations.
The reports added, citing sources, that the markets regulators will seek detailed disclosures on IPO prices, pre IPO sales & private investor. Reportedly, it would also bring mutual fund under the securities disclosure rules.
The regulator is trying to address these rules as most new age companies are loss making entities & traditionals metrics do not apply to them. For example, price earning ratio, earning per share and performance ratios are certain number that these companies cannot provide to their investor through DRHP and it becomes impossible to judge the healths of the company.
New age tech startup continue to make losses for a long time because even they & their investor understand that long term growths is better than short term profits. Therefore, the rules and regulations that apply to large corporations cannot be applied to these new companies.
Therefore, SEBI seeks to add complementary information parameters and KPIs to increase the prospect of new companies. Detailing how these KPI will contribute to the business will help investors make informed decisions.
SEBI plans to create new disclosure rules amid Indian startup share on public exchange. The stocks of Zomato, Paytm, Nykaa, CarTrade, Policybazaar and many more have come under scrutiny and SEBI has been criticized for equating these losing companies with huge IPO of profitable legacy companies.
With startup like Snapdeal, boAt, Flipkart, Ecom Express, OYO, BYJU’s, FirstCry, Pepperfry and more planning to go public, the declines of their predecessors have prompted the need for detailed disclosure and transparency, especially when the market price private share is significantly less than the price offered to the public.