Steps to Listing on the BSE SME Exchange: Launched in March 2012 to support small businesses looking to raise equity capital, BSE SME has grown to 435 companies with a market cap of Rs 66,415 crore listed so far, of which 172 have migrated to the main board.
Steps to Listing on the BSE SME Exchange: The SME platform for BSE has gained significant traction over the past decade. Launched in March 2012 to support small businesses looking to raise equity capital, BSE SME has grown to 435 companies with a market cap of Rs 66,415 crore listed so far, of which 172 have migrated to the main board. The total money raised by the listed companies was Rs 4,982.71 crore while 263 companies were listed as of Thursday, according to the exchange’s data.
The criteria to list on the BSE SME platform are fairly simple. The post-issue paid-up capital of the company should not be more than Rs 25 crore and net tangible assets of a minimum of Rs 1.5 crore along with a positive net worth.
In terms of the company’s track record, according to the BSE SME guidelines, the company or the partnership/proprietorship/LLP Firm or the firm, which is converted into the company, should have a combined track record of at least three years. If it has not been in operation for three years then the company must be funded by banks or financial institutions or central or state government or the group company must be listed for at least two years either on the main board or SME exchange.
Also, it should have combined positive cash accruals (earnings before depreciation and tax) in any of the years out of the previous three years.
The exchange also mandates that the company should have a website, facilitate trading in demat securities and enter into an agreement with both the depositories. Further, the promoters of the company should not have changed in the last one year from the date of filing the listing application, according to the details available on the BSE SME website.
Here’s how an SME can list on the BSE SME Exchange:
Appoint a merchant banker to carry out the company’s due diligence pertaining to all financial documents, material contracts, government approvals, promoter details etc., and prepare the documentation for filing. The banker would then plan your IPO structure, share issuances, and financial requirements.
The merchant banker will then prepare the draft red herring prospectus (DRHP) or draft prospectus and file with the exchange and markets regulator Securities and Exchange Board of India (SEBI).
The exchange checks the documents and an official from the exchange visits the company premises while the promoters are also called for an interview with the exchange’s Listing Advisory Committee.
If all requirements are fulfilled by the company, the exchange issues an in-principle approval to the draft on the recommendation of the committee.
Merchant banker then files the prospectus with the Registrar of Companies (ROC) with details including the opening and closing dates of the issue, issue price, etc.
Once approval is received from the ROC, the exchange is informed about the opening dates of the issue and the required documents.
The IPO then opens and closes as per the dates submitted and after the closure of the IPO, the company submits the documents as per the checklist such as annual reports, shareholder structure, corporate governance reports, etc., to the exchange to decide the basis of allotment.
The exchange then finalizes the allotment basis and issues the notice for listing and trading. The shares of the company are traded on the exchange under a ticker symbol and ISIN (International Securities Identification Number) code to identify securities.
Also read: MSME listing: How to migrate from NSE SME platform to main board? Check revised criteria
According to BSE SME, the post-issue face value capital should not be more than Rs 25 crore while the minimum application and trading lot size should not be less than Rs 1 lakh. Also, the issue should be completely underwritten and merchant bankers should underwrite 15 per cent in their own account.