In India, IPOs can form an excellent opportunity for SMEs to raise money and get listed on the country’s stock exchanges. But like every other company eyeing an IPO, SMEs also have a set of key requirements and eligibility norms to adhere to while applying for an IPO. Let’s see what they are for both BSE and NSE.
To be listed, the company will be incorporated as a Public Company under the Companies Act, 1956 or 2013, or the entity will be converted into a public company. BSE SME platform (BSE) and NSE EMERGE Platform (NSE) both have their unique eligibility criteria for SME listing, along with the SEBI Guidelines given for the listing. Here’s more to both the listing criteria.
|Eligibility Criteria||BSE Listing Requirements||NSE Listing Requirements|
|Post Issue Capital (FV)||Minimum: INR 3 Cr
Maximum: INR 25 Cr
|Maximum: INR 25 Cr|
|Track Record||· Net Tangible Assets: INR 3 Cr
· Net Worth: INR 3 Cr (INR 15 Cr for broking firms)
· Distributable profits in terms of Section 123 of the Companies Act 2013 for a minimum of 2 years out of preceding 3 completed FYs or the net worth shall be at least INR 5 Cr. Profit before tax of INR 5 Cr for broking firms.
|· Track record of a minimum of three years
· The company should have positive cash accruals (EBDT) from operations for a minimum of 2 financial years preceding the application. Additionally, the company’s net-worth should be positive.
|Other Requirements||· Compulsory facilitation of trading in Demat securities
· Compulsory corporate website
· There should be a certificate that there is no winding petition or reference to BIFR
· No change in promoter in preceding one year
· Promoters to attend to the interview with the Listing Advisory Committee
|· The Company has not been referred to Board for Industrial and Financial Reconstruction (BIFR).
· There shouldn’t be any material regulatory or disciplinary action by a stock exchange or regulatory authority in the past three years against the applicant.
· There is no winding up petition against the applicant company that has been accepted by a court.
Key Norms of SEBI for SME Listing
Here are the key norms of SEBI for SME listing.
- A public shareholding of at least 25%
- Minimum application amount/ trading lot of INR 1 lakh
- Minimum number of subscribers in IPO should be at least 50 investors
- Market making – through exchange registered market for a minimum of three years
- Underwriting – 100% is compulsory, out of which 15% should be done by the MB in his own account
- Offer document – It isn’t subject to SEBI observation
Now what is the criteria to migrate to move SME to Mainboard.
- The paid up capital of the company must be INR 10 Cr
- The company should be listed on the SME platform for a minimum of two years
- <500 shareholders – T to T group
- An approval from 2/3 of non-promoter shareholders is necessary
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