BSE SME Eligibility Criteria

For the purposes of listing, BSE SME platform of the Exchange has laid down certain norms and eligibility criteria that needs to be fulfilled. Here are the BSE SME eligibility conditions explained.

Incorporation:

The Issuer should be company incorporated under companies act 1956/2013 in India.

BSE SME Exchange Listing Requirements:

1. Post paid up capital requirement:

The post issue paid up capital of the company (face value) shall not be more than Rs. 25 Crore.

2. Net worth:

The Issuer company should have net worth of at least Rs 1 crore for 2 preceding full financial years.

3. Net Tangible Assets:

The Issuer company should have net tangible assets of at least Rs 3 crore in last preceding full financial year.

4. Track Record of at least three years:

The applicant company seeking a listing on the BSE SME Exchange must have a track record of at least three years. If the company has acquired a proprietorship, registered partnership firm, or LLP, the combined operational history of these entities must also total a minimum of three years.

Additionally, the applicant must demonstrate at least one full financial year of operations along with the corresponding audited financial results.

OR

In cases where the applicant does not have a three-year track record, the project for which the BSE SME IPO is proposed must be appraised and funded   by recognized institutions such as NABARD, SIDBI, banks (excluding cooperative banks), or other financial institutions. 

Regardless of the situation, the applicant must maintain at least one year of operational history and provide audited financial results for that period (one full financial Year).

5. Earnings before Interest, Depreciation and tax:

The company, proprietorship, registered firm, or LLP must demonstrate operating profit (earnings before interest, depreciation, and tax) from operations for at least two out of the three most recent financial years preceding the application.
Additionally, the company should have recorded operating profit for one full financial year immediately preceding the application date.
For those seeking listing where the project has been appraised and funded by reputable institutions such as NABARD, SIDBI, banks (excluding cooperative banks), or other financial institutions, it is essential to show a positive operating profit for one full financial year prior to the application for the valuation of SME IPO.

6. Leverage Ratio:

Leverage ratio of not more than 3:1. Relaxation may be granted to finance companies.

7. Other Listing Criteria

Disciplinary action:

• No regulatory action of suspension of trading against the promoter(s) or companies promoted by the promoters by any stock Exchange having nationwide trading terminals.
• The Promoter(s) or directors shall not be promoter(s) or directors (other than independent directors) of compulsory delisted companies by the Exchange and the applicability of consequences of compulsory delisting is attracted or companies that are suspended from trading on account of non-compliance.
• Director should not be disqualified/ debarred by any of the Regulatory Authority. 

Know Whether You Are Eligible! Link To Eligibility Assesment!

Default

• The applicant company, its promoters, and any subsidiary companies must have no outstanding defaults in paying interest or principal to debenture, bond, or fixed deposit holders.

Name change

• If a company has changed its name in the past year, it must ensure that at least 50% of its revenue for the preceding full financial year—calculated on a restated and consolidated basis—comes from activities associated with its new name. This requirement applies to entities seeking to list on the BSE SME platform.
• There must be a minimum gap of six months from the date of withdrawal or rejection of the issue by SEBI or the exchanges.

A. Additional Criteria for broking companies applying for SME IPO:

1. Net worth and profit

Net worth of minimum Rs. 5 crores with profit before tax of at least Rs. 5 crores in any 2 years out of 3 financial years.
Or
Net worth of at least Rs. 25 crores in any 3 years out of 5 financial years.
The Financial year should be for a period of 12 months. Extraordinary income* will not be considered for the purpose of profits.

2. Net Tangible Assets:
The Net Tangible assets of at least Rs. 3 Crores as per the latest audited financial results.

3. Post issued Paid up capital:
Post issue paid up capital of the Broking Member should be minimum Rs. 3 crores.

B. Additional Criteria for Micro Finance Companies:

Micro finance companies, in addition to the existing criteria for all SME companies, should have Asset Under Management of at least Rs. 100 Crores, client base of 10000 & above and it should not have accepted / held public deposit.

Additional Requirements for all companies seeking to get listed on BSE SME

• It is mandatory for a company to have a functional website.

• All of the promoter and promoter group shareholding in the company must be in dematerialized form.

• It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories.
• There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment.
• The Board composition should be in compliance with the requirements of Companies Act, 2013 at the time of In-principle approval.
• The Net worth will be calculated as per the definition given in SEBI (ICDR) Regulations
• The Company has not been referred to NCLT under IBC.
• There is no winding up petition against the company, which has been admitted by the court.

Conclusion:

In conclusion, listing on the BSE SME platform requires companies to meet a comprehensive set of financial, operational, and regulatory criteria designed to ensure their stability and growth potential. From maintaining a solid net worth and track record, to fulfilling the requirements around tangible assets, leverage ratios, and compliance with corporate governance norms, companies must carefully prepare to qualify for the listing. Understanding and adhering to these guidelines is crucial for SMEs seeking to raise capital and expand through public listing. With the right preparation, businesses can unlock new opportunities for growth while maintaining investor confidence.

 

What role does IPO Advisors play in successful IPO?

IPO Advisors play an important role in successful launch of an IPO. Their advisory role from IPO readiness, selecting the best merchant banker in India for SME IPO, various due diligence activities and IPO valuation guides the company throughout the IPO Issue and listing process. IPO platform in India provides information on upcoming IPOs on NSE Emerge and BSE SME and list of merchant bankers and anchor investors. Role of IPO advisor is important in the success of the listings.