In an attempt to boost early-stage funding in startups, SEBI relaxed norms for angel investors.
Angel investors are financiers who put money in new companies at their formative stages.
It has raised the total number of angel investors in a startup to 200 from 49.
It has also reduced the minimum investment amount in startups by angel investors to Rs 25 lakh from Rs 50 lakh.
SEBI has allowed angel funds to invest in startups incorporated within five years before the day of investment, up from three years.
An investment by an angel fund would be locked-in for one year, down from three years. It allowed angel funds to invest in overseas venture capital undertakings up to 25% of their investible corpus.
The regulator also decided to bar promoters and the top management of companies from entering into agreements with private equity players for an additional compensation without a nod from the company’s board and shareholders.
All such agreements entered during the past three years from the date of the Sebi notification should be informed to the bourses for public dissemination including those which may not be currently valid.
By amending some of the rules, soon it would allow foreign portfolio investors to invest in unlisted debt securities and securitised debt instruments. This decision was taken to attract inflows into India’s debt market and it was in line with a recent announcement by the RBI.