SME Exchange

BENEFITS OF SME EXCHANGE LISTING

  1. Listing provides an opportunity to SME entrepreneurs to raise capital to fund new projects/ undertake expansions/ diversifications and for acquisitions.
  2. This mode of fund raising through infusion of equity can help the Companies to raise borrowed funds at efficient rate.
  3. Equity financing can be used to reduce the debt burden thereby reducing the interest and other financing costs.
  4. Listing also provides an exit route to private equity investors.
  5. Listing also helps generate an independent valuation of the company by the market.
  6. Listing raises a company's public profile and image with customers, suppliers, investors, financial institutions and the media.
  7. Listing leads to better corporate governance and timely disclosures and thus also protects the interest of the investors.
  8. Listing provides a continuing liquidity to the shareholders of the company.
  9. Companies listed on SME Exchange can anytime migrate to the main Board of BSE provided shareholders’ approval is accorded.

TAX BENIFITS

PARTICULARS LISTED SHARE UNLISTED SHARE
Long Term Capital Gain Tax 0% 20% after Indexation
Short Term Capital Gain Tax 15% 30%

GUIDELINES FOR LISTING

  1. The post issue face value capital should not exceed Rs. Twenty-five crores.
  2. The minimum application and trading lot size shall not be less than Rs. 1,00,000/-
  3. The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be less than Rs 1,00,000/-
  4. The investors holding with less than Rs 1,00,000/- shall be allowed to offer their holding to the Market Maker in one lot.
  5. The issues shall be 100% underwritten and Merchant Bankers shall underwrite 15% in their own account.

LISTING PROCEDURE

  1. The issuer Company should first appoint a Merchant Banker in an advisory capacity. The Merchant Banker will conduct due diligence of the Company.
  2. After Due diligence the Merchant Banker will prepare DRHP/Draft Prospectus and file it with the Exchange as well as with SEBI as per requirements.
  3. BSE/ NSE will verify the documents and processes the same. A visit to the company's site shall be undertaken by the Exchange official .The Promoters are called for an interview with the Listing Advisory Committee.
  4. BSE/NSE will issue an In-Principle approval on the recommendation of the Committee, provided all the requirements are compiled by the Issuer Company.
  5. Merchant Banker will file these documents with the ROC indicating the opening and closing date of the issue.
  6. Once approval is received from ROC, they intimate the Exchange regarding the opening dates of the issue along with the required documents.
  7. The Initial Public Offer will open and close as per schedule. After the closure of IPO, the Company will submit the documents as per the checklist to the Exchange for finalization of the basis of allotment.
  8. BSE/ NSE will finalize the basis of allotment and issues the Notice regarding Listing and Trading

CRITERIA FOR NEW LISTING

  1. The Company shall be incorporated under the Indian Companies Act.
  2. The post-issue paid up capital of the company shall be at least Rs. 3 Crore.
  3. Net worth (excluding revaluation reserves) of at least Rs.3 crore as per the latest audited financial results.
  4. Net Tangible Assets of the company should be at least Rs.3 crore as per the latest audited financial results.
  5. 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.
  6. It is mandatory for a company to have a website.
  7. It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories.

DIRECT LISTING

  1. The minimum paid up capital should be Rs. 1 crore and the maximum should be Rs. 25 crores.
  2. Net worth (excluding revaluation reserves) should be at least Rs. 1 crore as per the latest audited financial results.
  3. Distributable profits in for at least two years out of immediately preceding three financial years (provided that total period of the latest 3 financial years should comprise a period of atleast 36 months). Extraordinary income will not be considered for the purpose of calculating distributable profits Or the net worth should be at least Rs. 3 crores.
  4. The public shareholding should comply with the requirements of Securities Contracts (Regulation) Act, 1956 (SCRA), Securities Contracts (Regulation) Rules, 1957 (SCRR) and the Listing Agreement. The minimum number of public shareholders should be fifty.
  5. A minimum of 50% of the public shareholding should be held in demat form.
  6. The company should be listed on any recognized Stock Exchange.

The companies can make a fresh application to migrate to the Main Board after a period of two years from the date of listing on the BSE SME Platform, provided it fulfil the norms of Direct Listing on the Main Board.

At least one Market Maker shall be appointed for a minimum period of 3 years from the date of listing on BSE SME Platform.

The Market Maker shall hold at least 5% of the issue size of the company on the date of listing of the company on the SME Platform.

The Merchant Banker to the issue will take the responsibility of continuous market making through the Member who is registered as a Market Maker with the SME Platform of the Exchange.

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