SEBI woos Silicon Valley for investments in tech startups

Even as the fairytale around e-commerce companies is under constant scrutiny, the head of financial markets regulator SEBI made a trip to the Silicon Valley this week to promote India's burgeoning list of start-ups.

UK Sinha, chairman of the Securities and Exchange Board of India (SEBI) appealed to the industry leaders of Silicon Valley to consider Indian startups as a viable option after the country tweaked rules to protect minority shareholders. The rules have made it easier for investors in the country's over-4,000 technology startups to eventually cash out through initial public offers.

"The technology startup scene in India has picked up dramatically. A lot of investment has taken place in those companies from Silicon Valley. The question is how they exist, and what is the minority shareholder protection available to them. That we are trying to address," Sinha said.
The damage control comes after in 2013, in a surprise overhaul of corporate governance rules, the government clamped down on related-party transactions, benefiting majority shareholders. It also beefed up the role of independent directors and audit committees on company boards. But now, minority shareholders in India have stronger rights than in the United States, Sinha claimed.

In a recent World Bank report, India ranked among the top 13 countries that protect the rights of minority investors, with the United States lagging in 35th place. But IPOs in India's tech sector remain extremely rare. In March, Indian online retailer Infibeam became country's first e-commerce company to list its shares, raising $67 million.