BSE SME Exchange is an SME-focused stock exchange. Actually, the Bombay Stock Exchange monitor and operate this exchange as per the rules and regulations laid down by SEBI. Here in this article, we list down all the steps you need to follow for the BSE SME Exchange Listing of your company.
The platform helps entrepreneurs and small business owners secure funds from the industrial investors of the country. It also provides opportunities to identify and invest in good companies at an early stage, long-term Capital Gain tax benefits, and Exit routes to the investors.
So this is a win-win platform for both entrepreneurs and investors. Here in this article, we have explored the BSE SME exchange listing requirements, advantages, procedures, and eligibility criteria.
Table of Contents
Advantages of BSE SME Exchange Listing
- BSE SME provides an avenue to raise capital through equity infusion for growth-oriented SMEs.
- The SMEs benefit from greater credibility and enhanced financial status leading to demand for the company’s shares and higher valuation of the company.
- Equity financing provides growth opportunities like expansion, mergers, and acquisitions. Thus it is a cost-effective and tax-efficient mode.
- It provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing their lock-in period.
- Employee Stock Options ensures stronger employee commitment, participation, and recruitment incentive.
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BSE SME Exchange Listing Criteria
1. Eligibility criteria
The first step towards becoming eligible for BSE SME Listing is to form a Public Limited Company.
In addition, the company must be a Small and Medium Enterprise (SME) with a post-issue paid-up capital of up to Rs. 25 crores and a minimum of Rs. 1 crore. Also, the company is active for at least 3 years. It also must have positive cash accruals (earnings before depreciation and amortization) in at least 2 out of the 3 preceding years.
2. Appointment of Intermediaries
The company must appoint a Merchant Banker, a Registrar to the Issue, and a Market Maker for at least two years.
3. Drafting of Offer Document
The company must draft an offer document in accordance with the BSE SME listing guidelines.
4. Filing of Offer Document
The company must file the offer document with the BSE SME exchange and obtain its in-principle approval.
5. Pricing of Issue
The issue price should be determined based on the recommendations of the Merchant Banker. It must be done in accordance with the SEBI (ICDR) Regulations.
6. Minimum Subscription
The minimum subscription size is 50% of the issue size.
7. Allotment of Securities
Allotment of securities should be made on a proportionate basis to all investors who have applied for the issue. It is subject to allotment of minimum bid lot.
8. Trading on the Exchange
The company’s securities will be listed and traded on the BSE SME exchange.
By meeting these requirements, a company can list on the BSE SME exchange.
BSE SME Exchange Listing Procedure
The listing procedure is simple compared to other stock exchanges. Planning is the first part of the listing. You must appoint Merchant Banker/s in an advisory capacity.
The merchant banker’s responsibility is to prepare the filing document. The next step is the submission of the DRHP/Draft Prospectus to the Exchange as well as with SEBI as per requirements. The exchange verifies the documents and processes the same. In addition, exchange officials will visit the company’s site.
Then the exchange calls the promoters for an interview with the Listing Advisory Committee. After a satisfactory interview, BSE issues an In-Principle approval on the recommendation of the Committee. However, you will need to comply with all the requirements of the Issuer Company.
Then your merchant banker will file documents with the ROC indicating the opening and closing date of the issue. Once you receive the approval from the ROC, they intimate the Exchange regarding the opening dates of the issue along with the required documents.