How to List a Company in BSE SME Exchange – Beginners Guide

Entrepreneurship is exciting. But taking it to the next level is even more exciting. Most small and medium enterprises (SMEs) in India aspire to raise funds and grow at a faster pace. One of the best ways to do that is by getting listed on the BSE SME Exchange. If you have a small or medium-sized enterprise, this platform can assist you in raising funds and getting noticed.

But how do you get your company listed on the BSE SME Exchange? Let us guide you through the process in easy steps so you know how to do it. This tutorial will tell you all about it.

What is BSE SME Exchange?

The BSE SME Exchange is a dedicated platform of the Bombay Stock Exchange (BSE). It facilitates small and medium enterprises to raise funds by listing their shares. These shares are purchased by investors, and the company receives funds for expansion.

It is a dedicated platform for SMEs that wish to become public companies but are not yet ready for the primary stock exchange.

Benefits of Listing on BSE SME Exchange

Before we go into the steps, let’s quickly look at why it’s good to list your company here.

• Easy Access to Capital – You can raise funds directly from the public.
• Increased Visibility – Your company gets more attention from investors, customers, and even banks.
• Credibility Boost – Being listed on BSE gives your business a lot more trust and respect.
• Easier Expansion – You can expand into new markets faster with more funds.
• Fair Valuation – Your company’s value is set by the market. It helps you understand its true worth.

Eligibility Criteria for Listing on BSE SME Exchange

Not every small business can list on the BSE SME platform. Your company must meet the following conditions:

• Your company should be a public limited company.
• You need a positive net worth.
• Your post-issue paid-up capital must be at least ₹3 crore and not more than ₹25 crore.
• Your business must have been in operation for at least three years.
• You must have a good track record of profits in at least two out of the last three years.
• Your company should not be promoted by a large corporate group.

These criteria ensure that only serious businesses are listed on the platform.

Step-by-Step Process to List on BSE SME Exchange

Now, let’s go through the full process to list your company. It may seem complex, but we’ll break it down into simple steps.

1. Appoint a Merchant Banker

The first step is hiring a SEBI-registered merchant banker. They act as your advisor and guide you through the listing process. They prepare your documents, ensure compliance, and deal with BSE on your behalf.

2. Business Restructuring (if needed)

Sometimes, you may need to convert your company into a public limited company if it’s still a private limited company. This is required because only public limited companies can list on the stock exchange.

3. Prepare Documents

The merchant banker will help you prepare important documents. These include:

• Draft Prospectus (contains company details and financials)
• Due Diligence Report (proves your financial health and legal compliance)
• Financial Statements (for at least three years)
• Business Plan (future plans, expansion strategy, etc.)

These documents will be reviewed by BSE before they approve your listing.

4. Application to BSE SME Exchange

Your merchant banker submits your application to the BSE SME Exchange along with all documents. BSE reviews everything to ensure you meet their eligibility and compliance rules.

5. Site Visit and Verification

BSE may conduct a physical visit to your office or factory to understand your business better. They will also verify your financial documents and operations.

6. Approval from the Listing Committee

After review, your application goes to the BSE Listing Committee. They decide whether your company is suitable for listing. If they approve, you move to the next step.

7. Draft Offer Document Upload

The draft offer document gets uploaded to BSE’s website and SEBI’s website. This allows investors and the public to review your business details. If anyone has objections, they can raise them during this period.

8. IPO (Initial Public Offering)

Once the draft offer document is cleared, your merchant banker will launch your SME IPO. This is where the public can buy shares in your company. The funds raised in the IPO go directly to your company.

9. Listing and Trading

After the IPO, your company’s shares are officially listed on the BSE SME Exchange. Investors can now buy and sell your shares on the platform.

Key Documents Needed

Here’s a quick list of documents your company will need:

• Certificate of Incorporation
• Memorandum and Articles of Association
• Financial Statements (last 3 years)
• Business Plan
• Tax Returns
• Promoter’s Background Information
• Legal and Statutory Compliances
• Due Diligence Report from Merchant Banker

Read: How to Register a Company/ Startup in India

Cost of Listing on BSE SME Exchange

The cost to list on the BSE SME Exchange depends on several factors. These include your company size, the funds you want to raise, and merchant banker fees.

Here’s a rough estimate:

• Merchant Banker Fees – ₹5 lakh to ₹15 lakh
• Legal and Compliance Fees – ₹3 lakh to ₹8 lakh
• Listing Fees to BSE – Around ₹3 lakh to ₹4 lakh
• Marketing and Publicity – ₹2 lakh to ₹5 lakh (optional)

The total cost could range between ₹15 lakh to ₹30 lakh for most companies.

Benefits of BSE SME Listing Compared to Traditional Bank Loans

Easier Access to Funds

Raising money from the public is often faster and easier than getting a bank loan. Banks require heavy collateral, while IPO investors only need a good business story.

Higher Valuation

Your company’s valuation is determined by the market. In many cases, market valuations are much higher than private valuations.

Liquidity for Investors

Once listed, your shareholders can easily sell their shares on the exchange. This makes your business more attractive to early-stage investors.

Brand Visibility

Being listed on the BSE SME Exchange increases your brand’s visibility. It helps with customer trust and even attracts better suppliers and partners.

Common Challenges in Listing on BSE SME Exchange

Listing has many benefits, but there are also some challenges:

• Strict Compliance Rules – Your company must follow all SEBI and BSE rules.
• Transparency Requirements – You need to regularly share your financial results and business updates.
• Higher Costs – Listing costs can feel high for very small companies.
• Market Fluctuations – Your share price will depend on market conditions and investor sentiment.

Conclusion

Leveraging your small or medium-sized enterprise on the BSE SME Exchange can be a goldmine. It enables you to raise money, enhance credibility, and gain access to more business opportunities. While the procedure has several steps, it is every bit worth it for entrepreneurs with high aspirations.

If your company is stable and positioned for the next stage, apply to be listed on the BSE SME Exchange. Let a good merchant banker assist you in this process. With proper handholding and well-defined objectives, your SME can make it as a listed success story.

FAQs

Can startups list directly on the BSE SME Exchange?

No. Your company must be at least 3 years old with a track record.

Do I need profits to list on BSE SME?

Yes. At least two years of profits out of the last three are required.

Can family-owned businesses list on BSE SME?

Yes. As long as they meet eligibility criteria.

What happens after listing?

You must follow all SEBI and BSE compliance rules and regularly update shareholders