IPO_advisory_solutions2018-04-06T12:30:47+00:00

Initial Public Offering (IPO) Advisory & Solutions Services:

Traditionally Debt/loans used to be an instrument available to Companies to raise funds for business. However, there are certain costs such marketing, logistics, research, a brand creation where debt option is not available.

Companies also opt for Venture Capital / Private Equity. However, performance pressure and stringent conditions make such investment unattractive for most of the businesses.

Therefore, Initial Public Offering (IPO) on Main board i.e. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) is the ultimate solution. Now after the introduction of SME Stock Exchanges small IPOs like Rs.2 Cr are also possible. SME IPOs are quick (3 to 6 months) and comparatively cost effective than Main board IPOs. Such listing entitles Companies raised a good amount of money from the public without any repayment or commitment. Also, SME  IPO does not require any permission from SEBI. Further after certain period and criteria, such Companies are allowed to migrate to Main Boards of BSE & NSE.

We provide following Services to Companies for IPO Planning :

  • Exploring IPO possibility and Valuation.

  • Capital Structuring

  • Short listing of Merchant Bankers & Other Intermediaries

  • Searching Suitable Key Managerial Personnel (KMP) such as Chief Executive Officer (CEO), Chief Financial Officer (CFO), Company Secretary (CS).

  • Guidance on searching Independent Directors.

  • Designing of Corporate Governance Policies& Other Policies

  • Co-ordination for Due Diligence

  • Co-ordination for SEBI Approval

  • Registrar of Companies Approvals

  • Peer Review Certification and Audit of Financial Statements as per SEBI Guidelines for IPO.

  • Restatement of Financial Statements as per SEBI Guidelines for IPO.

  • Certifications for IPOs

  • Convergence and Implementation of IND AS for listed and under listing Companies.

  • Statutory Audit and other audits for listed Companies.

ABOUT  IPO’s

IPO Sizes

SME IPO size is Rs 1.50 Cr to 40.00 Cr in recent times. More than 200 Companies have listed on SME Exchanges. Main board IPO are usually on the higher side.

 Suitable

SME IPOs listing is suitable for Companies with low turnover, less capitalization but the potential for high growth in near future. Upcoming companies, startups, e-commerce, technology companies, infrastructure, developers, agro focused companies are few of them.

Benefits of getting listed in the Stock Market 

  • Reduction of debt burden

  • Fund-raising for Capital expenditure, expansion, new projects, M&A etc from Public.

  • Raise funds for activities such as marketing, research where debt is not available.

  • Liquidity to investors/share-holders without affecting the stability of the company

  • Listed companies generally find that the market perception of their financial and business strength is enhanced.

  • Listing raises a company’s public profile with customers, suppliers, investors, financial institutions and the media.

  • An initial listing increases a company’s ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutional Placements and ADRs / GDRs / FCCBs, and in the process attract a wide and varied body of institutional and professional investors.

  • IPO listing is also a great solution for companies struggling with succession planning and that have difficulty in getting acquired by another company. IPO listing also helps Companies to convert paper currency in currency. It can help to issue ESOPs and retain talent.

Tax Benefits of getting listed in the Stock Market

The sale of unlisted shares in short-term attract the capital gain tax up to 30% as applicable to the taxpayer and the long-term capital gain tax of 10% without indexation and 20% with indexation.

The sale of listed securities in the short term attract the capital gain tax of 15% and there is no long-term capital gains tax provided it has been subject to Share Securities Transaction Tax. This makes it clear that the listing of shares is a very attractive option for SMEs.

Eligibility criteria for listing on NSE Emerge Platform

The following criteria should be complied with as on the date of filing the Public Offer Document with NSE as well as when the same is filed with RoC and SEBI.

Parameter Listing Criterion
Incorporation The Issuer should be a company incorporated under the Companies Act 1956 / 2013 in India.
Post Issue paid up Capital The post issue paid up capital of the company (face value) shall not be more than Rs. 25 crores.
Track record • Track record of at least three years of either
i. the applicant seeking listing; or
ii. the promoters****/promoting the company, incorporated in or outside India or
iii.Proprietary / Partnership firm and subsequently converted into a Company (not in existence as a Company for three years) and approaches the Exchange for listing.
iv.Promoters mean one or more persons with minimum 3 years of experience in the same line of business and shall be holding at least 20% of the post issue equity share capital individually or severally
v. The company/entity should have positive cash accruals (earnings before depreciation and tax) from operations for at least 2 financial years preceding the application and its net-worth should be positive.
Incorporation The post issue paid up capital of the company (face value) shall not be more than Rs. 25 crore.
Other Listing conditions • The applicant Company has not been referred to Board for Industrial and Financial Reconstruction (BIFR).
• No petition for winding up is admitted by a Court of competent jurisdiction against the Applicant Company.
• No material regulatory or disciplinary action by a stock exchange or regulatory authority in the past three years against the applicant company.
Disclosures The following matters should be disclosed in the offer document:
i. Any material regulatory or disciplinary action by a stock exchange or regulatory authority in the past one year in respect of promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) of the applicant company.
ii. Defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders, banks, FIs by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) during the past three years. An auditor’s certificate shall also be provided by the issuer to the exchange, in this regard.
iii. The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, and status of litigation.
iv. In respect of the track record of the directors, the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc.directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc.

Eligibility criteria for listing on BSE SME Platform :

Parameter Listing Criterion
Incorporation The Issuer should be a company incorporated under the Companies Act 1956 / 2013 in India.
Financials • Post Issue Paid up Capital
The post-issue paid up capital of the company shall be at least Rs. 3 crore.
• Networth
Net worth (excluding revaluation reserves) of at least Rs.3 crore as per the latest audited financial results.
• Net Tangible Assets
At least Rs.3 crore as per the latest audited financial results.
• Track Record
Distributable profits in terms of Section 123 of the Companies Act 2013 for at least two years out of immediately preceding three financial years (each financial year has to be a period of at least 12 months). Extraordinary income will not be considered for the purpose of calculating distributable profits.
Or
• The net worth shall be at least Rs.5 crores.
Other Requirements • It is mandatory for a company to have a website.
• It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories.
• There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment.
Disclosures • A certificate from the applicant company / promoting companies stating the following

a) ” The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).”

Note: Cases, where a company is out of BIFR, is allowed.

b) There is no winding up petition against the company, which has been admitted by the court or a liquidator has not been appointed.

Migration from BSE SME Platform to the Main Board The companies seeking migration to Main Board of BSE should satisfy the eligibility criteria It is mandatory for the company to be listed and traded on the BSE SME Platform for a minimum period of two years and then they can migrate to the Main Board as per the guidelines specified by SEBI vide their circular dated 18th May 2010 and as per the procedures laid down in the ICDR guidelines Chapter X B.

Other Requirements

  • It is mandatory for a company to have a website.

  • It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories.

  • There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment.

Disclosures

A certificate from the applicant company / promoting companies stating the following

a) ” The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).”

Note: Cases where company is out of BIFR is allowed.

b) There is no winding up petition against the company, which has been admitted by the court or a liquidator has not been appointed.

Migration from BSE SME Platform to the Main Board

The companies seeking migration to Main Board of BSE should satisfy the eligibility criteria It is mandatory for the company to be listed and traded on the BSE SME Platform for a minimum period of two years and then they can migrate to the Main Board as per the guidelines specified by SEBI vide their circular dated 18th May 2010 and as per the procedures laid down in the ICDR guidelines Chapter X B.