IPO: SEBI on Friday said that new-age technology companies preparing for listing of their shares should disclose key performance indicators related to reaching the base price of the issue in the offer document. The Securities and Exchange Board of India (SEBI) said in a consultation paper that such companies should be exempted from their valuation on the basis of issue of fresh shares and shares acquired in the last 18 months while applying for initial public offering (IPO) approval. Related disclosures should also be made.
Steps taken to bring IPO
This step of SEBI has been taken in the last few months in the context of bringing IPO by new technology companies to raise finance. Many of these technology companies had no track record of operating profit in the three years prior to the issue.
Emphasis on business expansion
Such companies usually do not reach a position of making profit for a long time. The reason for this is that even before reaching the state of ‘no profit no loss’, these companies insist on expanding their business instead of making profit in the initial years.
Advice given to loss making companies
Issuing this advisory for disclosure provisions related to IPOs of loss-making companies, SEBI has said that comments and suggestions can be sent in this regard by March 5.
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