What is the idea behind SME IPO?
Although SME contribute a large portion to Indian Economy like 40% of the workforce in India , 45% of manufacturing output etc. Yet previously, SMEs used to demand only on Banks and Financial Institutes for capital requirement that too subjected to various loan constraints.
But since 2012, BSE and NSE have launched SME platforms where they could raise funds from the capital markets. Also, after few years the company can get their share transferred from SME platform to the Main Board.
What are the prerequisites to launch SME IPO?
The company should
- make necessary changes in the Board of Directors like appointment of Independent Director, CFO etc.
- Have its own website which contains the financial statement of last 3 years.
- Consult merchant bankers, share transfer agents and carry out agreement with them.
Eligibility criteria for IPO:
- As per latest audited financial statements, net tangible assets and net worth of company must be at least 3 crores separately.
- In terms of section 123 of the Companies Act , track record of distributable profit be at least 5 crores for last 5 years.
- The post- paid up capital of the company should at least be 3 crores.
Requirement Of The Documents For Listing ( BSE Exchange) :
What is the procedure for SME IPO?
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Yes, there are capital tax benefits on SME, but it varies for listed and unlisted securities. For unlisted securities, short term capital gains are upto 30% while long term capital gains are upto 20%. Whereas, for listed securities, short term capital gains are upto 15% and long term capital gains are NA, if the company has paid Securities Transaction Tax.
Yes there are annual maintenance charges. It is higher of either 25000 or 0.01% of full market capitalization. Market Capitalization is calculated as average of the prices on the last day of the financial year.
Since, regulation 260 is not applicable to SME IPO , therefore IPO grading is not required for listing on SME exchange.
|Particulars||SME Platform||Main Board||- - -|
|Paid-Up Capital ( Post Issue)||<25 Crores||>10 Crores||- - -|
|Underwriting||100% Underwritten||Compulsory,except where 75 % is allotted to QIB’s||- - -|
|Application Value (Min)||1 lakh||10-14 thousand||- - -|
|Allottees (Min)||50||1000||- - -|
|Market Making||Mandatory||Not Mandatory||- - -|
|Offer Document||Stock Exchange||SEBI||- - -|