BSE (Bombay Stock Exchange), Asia’s first stock exchange has set up an SME platform as per the rules and regulations laid down by SEBI (Securities and Exchange Board of India).
BSE SME provides a regulated platform for SMEs to raise funds from the public. It also helps harbour an investor-friendly environment, enabling the listing of SMEs from the unorganised sector, scattered throughout India, into a regulated and organised sector.
Established in 2012, over the past 8 years, BSE SME has listed 329 companies and raised INR 3,374.88 crores on the platform.
India’s over 51 million SMEs have contributed immensely towards industrial growth, providing employment and entrepreneurship opportunities in urban and rural areas. BSE SME has helped entrepreneurs raise equity for growth and expansion in a cost-effective manner, thereby assisting their aspirations, enabling wealth creation, and boosting social and economic development.
Advantages of SME Listing
- Provide SMEs with equity financing opportunities to grow their business from expansion to acquisition.
- Equity Financing will lower the Debt burden leading to lower financing costs and healthier balance sheets.
- Expand the investor base, which in turn will help in getting secondary equity financing, including private placement.
- Enhance company’s visibility. Media coverage can provide SMEs with greater profile and credibility leading to an increase in the value of their shares.
- Incentives for greater venture capital participation by providing an exit option thus reducing their lock-in period.
- Greater incentive for employees as they can participate in the ownership of the company and benefit from being its shareholders
- Encourage innovation and entrepreneurial spirit
- Capital Markets will help distribute risk more efficiently
- SME sector will grow better on two pillars of the financial system i.e. Banking and Capital Market
Initiating a dedicated Stock Exchange for SMEs will thus lead to mobilisation of the diversified resources of finance and build a bridge between the SMEs, Private Equity and Venture capital by providing an exit route.
Regulatory SEBI SME Guidelines
- Issuer with post issue face value capital up to 10 Cr. shall be covered under the SME Platform.
- Issuer with post-issue face value capital 10cr. to 25 cr. may get listed on SME Platform or on the Main Board
- Post issue face value capital above 25 Cr. has to be necessarily listed on the Main Board of the Exchanges
- There are additional provisions for migration to/ from mainboard
- The minimum application amount as well as minimum trading lot shall not be less than 1,00,000 Rs.
- All existing Trading Members will be eligible to participate in SME exchange without any further registration
- 100% underwritten issues and Merchant Banker/s shall underwrite 15% in their own account
- Merchant Banker to the issue will undertake market making through a stockbroker who is registered as a market maker with SME Exchange. He is responsible for market making for a minimum period of 3 years
BSE SME Eligibility Criteria
- Net Worth: Positive net worth
- Net Tangible Assets: Rs. 1.5 crores
- Track Record:The company or the partnership/ proprietorship/ LLP firm or the firm which has been converted into the company should have a combined track record of at least 3 years.
- In case it has not completed its operations for three years then the Company/Partnership/Proprietorship/LLP should be funded by way of loan/equity by Banks or Financial Institutions or Central or State Government or its undertaking, or its Group Company should be listed for at least two years either on the Main Board or SME Board of the Nationwide Exchange.
- The company or the firm or the firm which has been converted into the company should have combined positive cash accruals (earnings before depreciation and tax) in any of the years out of last three years and its net worth should be positive.
- The company should mandatorily facilitate trading in demat securities and enter into an agreement with both the depositories.
- The company should mandatorily have a website.
- The company should make no change to promoters in the preceding 1 year from the date it filed its application to BSE for listing on SME Segment.
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