SEBI Eyes Micro IPO Risk Mitigation

12 Sep 2024 , 01:02 PM

According to news reports, India’s securities regulator is mulling greater control of micro-cap firms that go public, including monitoring the use of their capital and implementing stricter due diligence standards for merchant bankers.

Other potential moves under consideration include mandating a longer track record of profitability and increased examination of financial statements, according to the report. This comes after reports of fraud in this market niche, they added.

Nonetheless, the Securities and Exchange Board of India is unlikely to take over the listing clearance process for small and medium firms from the National Stock Exchange of India Ltd. and the Bombay Stock Exchange Ltd., according to the report. Some investors have requested that the regulator provide direct monitoring of this procedure. The negotiations are still preliminary, and measures may change before a first draft is delivered to the regulator’s key market advisory group.

Since the epidemic, India’s micro-listings market has grown dramatically, spurred by investor interest in small businesses with the ability to develop in the face of rapid economic growth.

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