Sebi eases listing norms for SMEs

The stock market regulator, Securities & Exchange Board of India (Sebi), on Tuesday issued a model listing agreement for small and medium enterprises (SMEs) seeking listing on the SME exchange. The agreement relaxes the listing requirements for SMEs on proposed stock exchanges dedicated for the sector, a move likely to encourage small companies to get listed. 

According to a Sebi circular, companies listed on the SME exchange are required to send only a statement containing the salient features of all the documents to their shareholders instead of the entire annual report. Further, SME-listed companies need to submit financial results only on a half yearly basis (usually, it is on a quarterly basis). These companies will not be required to publish their financial results. Instead, it should be made available on their websites. 

The exchanges like NSE, BSE, MCX’SX, Inter-connected Stock Exchange and Bangalore Stock Exchange have shown keen interest in launching a separate SME platform after Sebi issued the operational guidelines. The regulator had earlier relaxed the minimum net worth criteria and track record for companies seeking listing on SME Exchange as compared to that of the usual exchange. An issuer with a post issue paid up capital up to Rs 25 crore is eligible for SME platform and will have to migrate to the main exchange subject to exchange approval if its capital exceeds beyond the prescribed limit. 

In a separate circular issued on Tuesday, the regulator clearly laid down the policy for issue, listing and trading of the securities issued by SMEs. Sebi said that an issuer listed on a SME exchange and whose post-issue face value capital pursuant to further issue of capital does not exceed Rs 10 crore shall make further issue of specified securities. 

Sebi has entrusted the merchant banker to completely underwrite the issue with at least 15% of the issue to be underwritten in their own accounts. Merchant bankers have also been mandated to compulsorily do market making for a period of three years from the date of listing. They have options to get represented on the board of the company. However, during the period of market making, promoters are not allowed to offer their holding to market makers. 

The regulator in its circular stated that a minimum of 50 investors is required at the IPO stage and not on a continuous basis. Further a stock broker of the main exchange need not obtain fresh registration for trading on the SME platform of the respective exchange.

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