Sebi sends notices to angel networks seeking details on their fundraising biz
Securities & Exchange Board of India (Sebi) has shot notices to at least half a dozen angel firms in the past one and half months, asking them to spell out details of their fund-raising business and explain whether they operate within the contours of the securities market law.
Though angel networks help startups raise seed money, Sebi fears that these little-known electronic platforms are treading in a regulatory twilight zone -by playing matchmakers in equity or debt market, they are acting like stock exchanges which they are not authorised to do.
And, by facilitating issuance of securities to more than 200 investors, some angel networks may be violating the rules of private placement.
“Treating an equity crowdfunding platform which is facilitating issuance of unlisted securities, as a stock exchange may not be appropriate“ said Tejesh Chitlangi, partner at IC Legal.