With the intention of encourage more investment in his country’s thriving technology startups and to promote rule changes in his country protecting minority shareholders, the head of India’s financial markets regulator visited Silicon Valley this week.

Investors in India’s over-4,000 technology startups would be able to more easily eventually cash out through initial public offers in Asia’s third-largest economy with aid from the improved regulations, said U.K. Sinha, chairman of the Securities and Exchange Board of India.

“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 exit, and what is the minority shareholder protection available to them?,” Sinha told Reuters in an interview on Thursday.

Related-party transactions were clamped down on and benefited majority shareholders by a 2013 overhaul of India’s corporate governance rules. The role of independent directors and audit committees on company boards were also beefed up by the changes in the regulations.

Sinha said that compared to similar regulations in the United States, the minority shareholders in India now have stronger rights.

The issue of corporate governance can be a thorny one in the Silicon Valley. To allow Facebook’s Chief Executive Officer Mark Zuckerberg to give away his wealth without relinquishing control of the social media juggernaut he founded, in April the company said it would create a new class of non-voting shares.

Alphabet has its own widely traded non-voting shares.

With the United States lagging in 35th place, India ranks among the top 13 countries for protecting the rights of minority investors according to a recent World Bank report on the issue of minority shareholder rights and corporate governance regulations.

However since many small investors in India are unaccustomed or even skeptical of the how venture capitalists value cash-burning companies with no physical assets, IPOs in the country’s tech sector remain extremely rare despite the regulations protecting the rights of the minority share holders, Sinha said.

Raising $67 million through public share sale in March, Indian online retailer Infibeam became India’s first e-commerce company to list its shares. Major competitors Flipkart and Snapdeal would also walk the ame path of listing their shares, hopes the market.

India has created an alternative set of regulations they may choose to follow to encourage more startups to go public.

Indian startups may elect to follow rules requiring less disclosure ahead of their listings in a manner that is quote similar and can be compared to the Jobs Act introduced in the United States four years ago. However this provision would also restrict their share sales to sophisticated investors.

“We are encouraging these companies to go public. We have met most of their requirements. They will get listed because their private equity investors have to have an exit,” Sinha said.

(Adapted from Reuters)

Categories: Economy & Finance, Regulations & Legal, Uncategorized