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In a welcome move, the Ministry of Corporate Affairs on 19 July 2016 issued a notification amending the Companies (Share Capital & Debenture) Third Amendment Rules, 2016 (Rules). These rules have simplified numerous things in terms of fundraising (equity / debt / hybrid instruments) and also provided relaxations for recognized startups as such by the Department of Industrial Policy and Promotion (DIPP) for issuance of sweat equity and ESOPs. News reports suggest that of a total of approximately 780 applications for recognition as startups to the DIPP, only 160 been classified by the DIPP as recognized startups. Given the number of startups in India at present, the above number is abysmally small.

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