IPO Desk

Benefits of Listing

  • Interest-Free Capital
  • Reduced Finance Cost
  • Migration to Main Board
  • Enhanced Liquidity
  • Employee Stock Options
  • Business Expansion

Take Your Business IPO and Raise Funding

Raise funding for your business in a debt-free manner with little control by investors. Experience a one-end-to-end solution for your IPO expectations and experience speedy IPO execution and transparent terms of IPO fundraising.

 

SME IPO Guide for Companies

SME IPO Eligibility

There are two SME IPO platforms in India: BSE SME and NSE Emerge. An SME company can choose one of these two platforms for its IPO. The SME company has to meet the SME IPO eligibility criteria set by the stock exchanges and SEBI. The BSE and NSE exchanges have quite similar requirements for an SME IPO.

 

Generic Criteria by SEBI for SME IPO Issuers

  • The issuer should have an operating profit of Rs. 1 crore for any 2 out of 3 previous financial years.
  • The Offer for Sale (OFS) component should not exceed 20% of the total issue size.
  • The amount raised for General Corporate Purpose (GCP) is capped at 15% of the issue size or Rs. 10 crores, whichever is lower.
  • Issue proceeds should not be used for the repayment of loans from promoters or related parties.

Note: Unlike mainboard IPOs, SME IPOs can only be listed on one exchange.

 

NSE SME IPO Eligibility

  • The company should be registered in India under the Companies Act.
  • Post-issue paid-up capital should not exceed Rs 25 crores.
  • The company should have a track record of at least three years.
  • The company should have an operating profit for at least any 2 out of the preceding 3 financial years.
  • The company should have a positive net worth in at least two out of three financial years.
  • The company should not have any winding up petition filed against it.
  • The issuer should provide a certificate stating that the company has not been referred to BIFR.
  • The issuer/promoter/directors should not be excluded from accessing the capital market.
  • The promoters/directors/founders/investors should not be classified as fugitives or delinquents.
  • Directors should provide documentation if they are under investigation or criminal proceedings.
  • Articles of incorporation should not contain restrictive clauses.
  • The issuing company promoters/promoter company(ies) should not have any disciplinary proceedings in the past three years.
  • Have failed to pay interest or principal on bonds/fixed deposits and banks.
  • In which case they must provide documentation of litigation, the nature of the litigation, and the status of the litigation.

 

In addition, for an SME IPO:

  • The minimum application and trading lot size is Rs 1,00,000.
  • The minimum number of allottees in an SME IPO should be 50.
  • IPO underwriting is mandatory, of which 15% should be underwritten by a merchant banker.
  • Market maker is mandatory.

 

BSE SME IPO Eligibility

  • The issuer should be registered under the Companies Act.
  • Post-issue paid-up capital should not exceed Rs 25 crores.
  • Net worth should be at least Rs. 1 crore for 2 preceding full financial years.
  • Net Tangible Assets should be Rs 3 crores in the preceding financial year.
  • A company should be in operation for at least three years.
  • The company must also have positive net assets.
  • The company should have a functioning website.
  • 100% of promoter shareholding in the company should be in Dematerialised form.
  • The company should support Demat securities trading.
  • The company should ensure that the promoters have not changed in the last one year.
  • The issuer should provide a certificate stating that the company has not been referred to BIFR.
  • There should not be a winding petition against the company.
  • The minimum size for the application and trading lot is Rs 1,00,000. The minimum number of shareholders should be 50.
  • Underwriting is mandatory. 15% of it should be underwritten by a merchant banker.
  • The company should have an operating profit for 2 out of 3 latest financial years.
  • The leverage ratio of the company should not be more than 3:1 except for finance companies.
  • There should not be any regulatory action of suspension of trading against any promoters or companies promoted by promoters.
  • The company directors and promoters should not be the promoters or directors of delisted companies.
  • The company director should not be debarred or disqualified by any of the regulatory authorities.
  • There should be no pending defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the company, promoters, or subsidiary companies.
  • In case of name change of the company in the last 1 year, 50% of the revenue for preceding full FY should be earned from the activity indicated by the new name.
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