SME LISTING

1	Net Tangible assets of at least Rs. 1 crore as per the latest audited financial results.
2	Net worth (excluding revaluation reserves) of at least Rs. 1 crore as per the latest audited financial results.
3	Track record of distributable profits in terms of sec. 205 of Companies Act, 1956 for at least two years out of immediately preceding three financial years and each financial year has to be a period of at least  2 months. Extraordinary income will not be considered for the purpose of calculating distributable profits. Otherwise, the networth shall be at least Rs. 3 Crores
4	Other Requirements:
	he post-issue paid up capital of the Company shall be at least Rs. 1 crores. The Company shall mandatorily facilitate trading in demat securities and enter into an agreement with both the depositories. Companies shall mandatorily have a website
5	Certificate from the applicant Company / promoting Companies stating the following:
	The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR).
	Note: Cases where Company is out of BIFR are allowed. There is no winding up petition against the Company that has been accepted by a court.
6	Listing Process will also involve:
	For listing on BSE SME platform promoters will mandatorily be required to attend an interview with the Listing Advisory Committee.

Eligibility

Cost Structure

Savings in Cost of Raising an IPO through SME platform
Sr. No.	Particulars	Cost on Main Board	Cost on SME Platform	Minimum Savings in Cost
1)	Need for SEBI Approval & fees	SEBI approval for DRHP is a preliminary condition for IPO Fees:-	SEBI approval has been waived off.	Rs. 25,000/-
		Based on Issue Size	Hence this cost is eliminated.
		Min – Rs. 25,000/-
		Max – Rs. 3,00,00,000/-
2)	Need for In principle approval of stock exchanges & fees	There is requirement to seek in-principle approval of stock exchanges where the shares are proposed to be listed post IPO.	In-principle approval of stock exchanges has been waived off.	Rs. 50,000/-
		Processing Fees:-	Hence this cost is eliminated.
		0.05 % of issue size.
		Min – Rs. 50,000/-
		Max – Rs. 25,00,000/-
3)	Initial Listing Fees (BSE)	Rs. 20,000/-	Rs. 50,000/-	(Rs. 30,000)
4)	Annual Listing Fees (BSE)	Based on paid up capital	Based on Market Capitalization	Rs. 55,000/-
		Min – Rs. 80,000/- for Rs. 50 crores	Min - Rs. 25,000/- upto
		Max - Rs. 62,50,000 plus Rs. 2500 for every increase of Rs. 5 crores or part thereof above Rs.1000 crores	Rs. 50 crores and
			Max - Rs. 50,000 for above Rs. 50 crores
5)	Fees for using the Book Building Software	Not Applicable	Based on Issue size:-	-
			Upto Rs. 25 crores – 2.5 lakhs
			Above Rs. 25 crores – 4 lakhs
	Total Savings			Rs. 100,000/-

Compliance Norms

	Sr. No.	Particulars	Main Board	SME Platform
	1	Eligibility	Minimum Post Issue Paid up capital –	Minimum Post Issue Paid up capital – Rs. 1 crore
			Rs. 10 crore	Maximum Post Issue Paid up capital – Rs. 25 crore.
	2	Track Record of Distributable Profits	There must be a distributable profits in 3 out of immediately preceding 5 years, with the last year showing profits	This condition has been waived off for SME IPOs
	3	Underwriting	Not Mandatory	100% of the issue should be underwritten. Merchant bankers are required to underwrite upto 15% in their own account
	4	Market Making	Not Mandatory	Merchant bankers are required to undertake market making for a period of 3 years from the date of listing
	5	Time Line	8-10 months	2-4 months
	6	Need for SEBI Approval & fees	SEBI approval for DRHP is a preliminary condition for IPO.	SEBI approval has been waived off.
			Fees:- Based on Issue Size	Hence this cost is eliminated.
			Min – Rs. 25,000/- , Max – Rs. 3,00,00,000/-
	7	Need for Inprinciple approval of stock exchanges & fees	There is requirement to seek in-principle approval of stock exchanges where the shares are proposed to be listed post IPO.	In-principle approval of stock exchanges has been waived off.
			Processing Fees:- 0.05 % of issue size	Hence this cost is eliminated.
			Min – Rs. 50,000/- , Max – Rs. 25,00,000/-
	8	Need for Public notice	Public notice of 1 month before opening of the offer	Public notice requirement has been waived off.
	9	Minimum number of investors	Minimum 1000 investors	Minimum 50 investors at the time of listing. No post listing continuous requirement of minimum number of shareholders
	10	Initial Listing Fees (BSE)	Rs. 20,000/-	Rs. 50,000/-
	11	Annual Listing Fees (BSE)	Based on paid up capital	Based on Market Capitalization
			Min – Rs. 15,000/-	Min - Rs. 25,000/- upto
			Max - Rs. 62,50,000 plus Rs. 2500 for every increase of Rs. 5 crores or part thereof above Rs. 1000 crores	Rs. 50 crores and Rs. 50,000/- for above Rs. 50 crores
	12	Fees for using the Book Building Software	Not Applicable	Based on Issue size:-
				Upto Rs. 25 crores – 2.5 lakhs Above Rs. 25 crores – 4 lakhs
	13	Trading Lot Size	1	Rs. 1,00,000/-
	Compliance Norms
	14	Shareholding Pattern & Financial Results submission	Quarterly Basis	Half Yearly Basis
	15	Publication of notice of Board Meeting & financial results	On Quarterly Basis, financials & notice of Board meeting needs to be published in 1 English newspaper and 1 newspaper of regional language where the registered office of the Company is situated	No requirement of publication. Only hosting on Company’s website is sufficient.
				Publication Cost is eliminated.
	16	Dispatch of Annual Reports to shareholders	Full report has to be sent	Abridged version can be sent. So printing and postage cost reduced.
	Migration Norms from Main Board to SME and Viceversa:
1	Migration from BSE SME Exchange to the Main Board of BSE: Any SME on BSE SME Platform with paid up capital more than Rs. 10 crores can move to the main board, provided shareholders approval by postal ballot such that votes cast by public shareholders in favour of shifting are at least 2 times the number of votes cast by public shareholders against the proposal and then apply to BSE Main Board. In addition to that, the Companies seeking migration to Main Board of BSE should satisfy the eligibility criteria as specified in 26(1) of SEBI (ICDR) Regulations, 2009 either at the time of initial listing on SME platform or at the time of seeking migration to Main Board. However, same will not be applicable where the Company had sought listing on SME platform by following the process and requirements prescribed in 26(2) (a) of SEBI (ICDR) Regulations, 2009.
2	Migration From Main Board To SME Exchange:
*	Shareholders approval by postal ballot such that votes cast by public shareholders in favour of shifting are at least 2 times the number of votes cast by public shareholders against the proposal.
*	Face value capital should be less than Rs. 25 crores.
*	All eligibility criteria of SME exchange must be fulfilled.

Time Frame

SR No	Procedure	Timeline
1	Conversion of Company into Public Limited Company, if applicable	05 11 2013
2	Preparation of Documents for conversion and submission to ROC for approval i.e. Alteration of Memorandum, Articles & filing of necessary forms for appointment of aforesaid directors	10 11 2013
3	ROC approval accorded for conversion	12 11 2013
4	Identification & appointment of Registrar & Transfer Agents & Submission of Master Creation forms with NSDL, CDSL for establishing connectivity	12 11 2013
5	Appointment of Managing Director, Whole Time Director, Independent Directors, Company Secretary & deciding about their remuneration, sitting fees etc.	17 11 2013
6	Constitution of committees - Audit, Shareholder Grievance, Remuneration etc. As per SME Listing Agreement	20 11 2013
7	Preparation of website of the Company & hosting code of conduct on the website	23 11 2013
8	Signing of Tri-Partite Agreement with NSDL & CDSL and receipt of ISIN	23 11 2013
9	Identification & appointment of peer review auditors & getting the financials of last 5 years restated and for last 1 year re-audited from peer review auditors as per SEBI (ICDR) Regulations, 2009	23 11 2013
10	Appointment of Merchant Banker & Market Maker	23 11 2013
11	Preparation of Project Report and Red Herring Prospectus (RHP)	10 12 2013
12	Filing of Red Herring Prospectus (RHP) with stock exchange & SEBI (only for hosting) along with application for in-principle approval with stock exchange	10 12 2013
13	Clearance from stock exchange	09 01 2014
14	Filing of Red Herring Prospectus (RHP) with ROC & getting it cleared from ROC	14 01 2014
15	Filing of Final Prospectus with Stock exchange and SEBI	19 01 2014
16	Opening of the Issue	24 01 2014
17	Closing of the Issue	27 01 2014
18	Allotment of shares	03 02 2014
19	Filing of listing application with Stock exchange	06 02 2014
20	Receipt of listing approval from Stock exchange	08 02 2014
21	Filing of corporate action form with NSDL & CDSL and demat credit of shares	09 02 2014
22	Filing of trading application with Stock exchange	11 02 2014
23	Receipt of trading approval from Stock exchange	13 02 2014

FAQs What is the relaxation provided by SEBI for SME IPO? Following ICDR Regulations are not applicable to SME IPO:- 6(1), 6(2), 6(3), 7, 8, 9, 10, 25, 26, 27, 49(1). What are the extra conditions which are required to be complied with in comparison with Main Board listing? 100% underwriting of the issue. Merchant Bankers need to underwrite 15% from their own account. Merchant Bankers are required to undertake market making for a period of 3 years. Whether Grading of IPO is compulsory for listing on SME Exchange? Regulation 26(6) is not applicable to SME IPO. Hence, IPO Grading is not compulsory for listing on SME Exchange. What is the lot size and provision for Odd Lots? SEBI has issued a circular vide dated 21st February, 2012 for standardized lot size for SME Exchange. The Regulation warrants that the odd lots can be sold only to the market makers and the investor has to give the declaration stating that he is selling all the odd lot shares of the particular scrip. This is to minimize the odd lots in the system. What are the capital gain tax benefits by listing on BSE SME? The tax benefits are immense. The unlisted shares will attract short term capital gains (STCG) tax upto 30% and long term capital gains tax (LTCG) of 20%. Whereas in listed securities, the STCG tax is 15% and LTCG tax is nil respectively, provided an investor has paid Securities transaction Tax. What are the preparations before listing on SME Exchange? Preparation required to be made for bringing the IPO proposed to be listed on the BSE SME Exchange is as follows: Keeping the Annual Reports on accounts ready. Peer Review by Reputed Chartered Accountant firms (since its inception or last 3 years, whichever is shorter) Detailed Disclosures about the Past Performance of the company. Future Projections of the company (CMA Data) for at least next 3 years. Conversion of private limited company to public limited company. Full time company secretary (Compliance Officer) to be appointed. Infusing 50% independent directors into the Board. Due diligence on the applicability of various Regulations. Due diligence (Legal) by reputed Legal firms. Due Diligence on the various approvals required from Regulatory Bodies. Detailed disclosures about the Risk Factors associated with the company. Detailed disclosures about the External Environment effecting the company. Detailed disclosures about the litigations, its magnitude and ramifications. Detailed disclosures about the Business activity. Documenting the Material Contracts and Agreements. Detailed disclosures about the Promoters & Management. Selection of Investment Banker, Registrar and Transfer Agent (RTA), Syndicate Member / Sub- Syndicate Members, electronic media and advertising agency, Escrow Bankers. Website is mandatory for listing companies. What is the listing fee? The SME platform will have one time listing fee of Rs. 50,000/-. What is the annual maintenance cost? Annual Fees will be charged on basis of Market Capitalization (MC) and not on Issue Size. The basis of calculation of MC will be average of price as on March 31 or last day of trading in the financial year. The minimum cost is Rs. 25,000 & maximum cost is Rs. 50,000. What are the provisions for publishing unaudited / audited financials? Statement containing the salient features of all the documents as prescribed in sub-clause (iv) of clause (b) of proviso to section 219 of the Companies Act, 1956 can be sent to shareholders instead of a full Annual Report. Submission of Half Yearly Results instead of Quarterly Results. No requirement of Publishing of Financial Results and notices of Board Meetings to adopt audited / unaudited results. Whether suspended companies are allowed to list on SME Exchange? The suspended companies’ scrips are not permitted for listing on BSE SME Exchange unless the suspension is revoked and the company is allowed to trade on the Main Board of BSE. What are the major features of SME Exchange? All the existing SEBI registered members are given membership on the SME exchange. Settlement mechanism of T+2days as applicable to the main Board. Quotes by market makers & Trading system of SME Exchange is based on BSE Online Trading System (BOLT).