SME Exchange – Listing Requirements

The 5 P'S of Listing Process on BSE SME

Planning

The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.

Preparation

The Merchant Banker prepares the documentation for filing after:

 conducting due diligence regarding the Company i.e checking the documentation
including all the financial documents, material contracts, Government Approvals,
Promoter details etc.
 and planning the IPO structure, share issuances, and financial requirements

Process

Application procedure:

 Submission of DRHP/Draft Prospectus - These documents are prepared by the Merchant

Banker and filed with the Exchange as well as with SEBI as per requirements.
 Verification & Site Visit - BSE verifies the documents and processes the same. A visit to
the company's site shall be undertaken by the Exchange official .The Promoters are called
for an interview with the Listing Advisory Committee.
 Approval - BSE issues an In Principle approval on the recommendation of the
Committee, provided all the requirements are compiled by the Issuer Company.
Filing of RHP/Prospectus - Merchant Banker files these documents with the ROC
indicating the opening and closing date of the issue.
Once approval is received from the ROC, they intimate the Exchange regarding the
opening dates of the issue along with the required documents.

Public Offering

The Initial Public Offer opens and closes as per schedule. After the closure of IPO, the Company
submits the documents as per the checklist to the Exchange for finalization of the basis of
allotment.

Post Listing

BSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.
The Process of SME IPO - Step-by-step Guide to Schedule IPO

What is SME IPO Process in India?

Small and medium enterprise Initial Public Offer (SME IPO) is the process when an unlisted
SME company sells its shares to the public for the first time and listed on the stock exchange
for trading. IPO Process makes a private SME company to a public limited company.

The process of SME IPO is also known as SME company 'going public'.

Fundraising through IPO is a complex process. It involves many legal processes, audits, and
professionals to help with the process. Some of the critical players in this process include:

 Company Promoters
 SME IPO Assistants
 Registrar of Companies (RoC)
 Merchant Banker or Investment Banker
 Bankers
 Registrar and Transfer Agents (RTA)
 Market Maker
 Depositories (CDLS, NSDL)
 Stock Exchanges (BSE or NSE)
 Auditors

SME IPO Process Steps (High Level)

IPO process is easy for SMEs in comparison to mainline IPO. But it is still a long and
complicated process. It takes at least 4 months from the day company appoints a lead manager.

1. Appointment of Merchant Banker

2. Capital Structuring, Due Diligence, and Pre-IPO preparation
3. Appointment of Bankers, Registrar, Market Makers, RTA etc.
4. Preparation of Offer Document (DRHP)
5. Filing of DRHP with Stock Exchange
6. Approval from Exchange and RoC
7. Issue Pricing
8. The Opening of Public Issue
9. Closure of the Issue & Allocation of Shares
10. Listing & Trading at the Exchange

SME IPO Process Steps with Timelines

Below are the activities an SME company must take to get listed through IPO route:
 SME IPO Process Schedule

Sr.
Activity Timeline
No.

1 Conversion of Company into Public Limited Company, if applicable X

Preparation of Documents for conversion and submission to the Registrar of Companies

2 (RoC) for approval. Documents includes Alteration of Memorandum, Articles & filing of X+7
necessary forms for appointment of aforesaid directors.

3 ROC approval for conversion X+9

Identification & appointment of Registrar and Transfer Agents (RTA or R & T Agent).
4 X+11
Submission of Master Creation forms with NSDL, CDSL for establishing connectivity.

Appointment of Managing Director, Whole Time Director, Independent Directors,

Company Secretary.
5 X+14

Deciding about their pay, sitting fees etc.

6 Constitution of committees including Audit, Shareholder Grievance and Payments. X+17

7 Preparation of website of the Company & hosting code of conduct on the website X+21

8 The signing of Tri-Partite Agreement with NSDL & CDSL and receipt of ISIN X+24

Identification & appointment the peer review auditors. Get the financials of last 5 years
9 X+26
restated and for last 1 year re-audited from peer review auditors.

10 Appointment of Merchant Banker & Market Maker X+29

11 Preparation of Project Report and Draft Red Herring Prospectus (DRHP) X+33

Filing of Draft Red Herring Prospectus (DRHP) with stock exchange along with an
12 X+38
application for in-principle approval with the stock exchange

13 Clearance from stock exchange X+75

14 Filing of Prospectus with ROC & getting it cleared from ROC X+80

15 Filing of Final Prospectus with Stock exchange and SEBI X+87

 SME IPO Process Schedule

Sr.
Activity Timeline
No.

16 Opening of the Issue X+90

17 Closing of the Issue X+93

18 Finalization of Basis of Allotment by RTA & submit to the Stock exchange X+96

RTA & Issuer to process corporate action to carry out lock-in for pre-issue capital held in
19 X+96
depository system.

20 Filing of corporate action form with NSDL & CDSL and demat credit of shares X+97

21 Filing of listing application with the Stock exchange to give listing and trading permission. X+98

Post Issue Advertisement in a English, a Hindi and a Bengali Newspaper with the wide
22 X+98
circulation within 10 days of completion of all activities.

23 Receipt of trading approval from Stock exchange X+99

What is the Procedure For SME Listing on BSE?
There are two ways of raising capital. Either borrowing from banks or funds from promoters.
Banking funds are the most common type of borrowings. But for a startup company, to bear the
cost of borrowed funds is very risky. Despite the benefits associated with the public listing, the
SMEs were not able to access the capital markets through Stock Exchanges due to several factors
such as stringent regulatory compliances, disclosure and financial requirements etc. The BSE
SME Exchange has been set up by the Bombay Stock Exchange (BSE) to provide Small and
Medium Sized Enterprises (SMEs), a platform for raising equity capital for their growth and
expansion, in March 2012.

A dedicated stock exchange for SMEs would allow them accessing the capital markets easily,
quickly and at lesser costs. SME (Small and Medium-size Enterprises) exchange is a platform
made by the BSE (Bombay Stock Exchange) in 2012 by the initiative of the Indian Government
along with SEBI. It is a phenomenal framework for the entrepreneurs. It is a popular concept
worldwide.

Need for SME Exchange:

 A dedicated stock exchange will provide SMEs with equal financing opportunities to
grow their business.
 Listing the company would facilitate the expansion of the investor’ base, which in turn
will help the company to get equity finance.
 With the availability of equity financing, the debt burden can be set lower resulting in a
healthier balance sheet and lowered financing cost.
 Company’s transparency will be increased by the participation of venture capital players,
who invest in a company for their growth and expansion.
 Ensures Tax Benefits.
 Enables liquidity for shareholders.

SEBI Norms for Listing:

Under the SME platform for the listing of specified securities, the entity has to comply the
following provisions:

 The SME must be a limited

 The post-issue face value capital should not exceed INR. 25 Crore (Twenty-five crores)
 The minimum application and trading lot size shall not be less than INR 1 lakh (one lakh)
 Net Worth must be at least Rs.1 crore as per the latest audited financial statements
 The company must have a track record of distributable profits in terms of section 123 of
Companies Act. 2013 for at least two out of the immediately preceding three financial
years. Otherwise, net worth must be at least INR. 3 crores.
 The company must facilitate trading in DEMAT securities and enter into an agreement
with both the depositories i.e. NSDL and CDSL.
 The company shall mandatorily have a website
  The issue must be a 100% underwritten issue. Merchant Banker License must
underwrite 15% on their own accounts.
 The company must have a minimum of 50 investors while listing through IPO.

In order to fulfill SEBI ICDR Regulations, consequent amendments have been made to various
other regulations such as:

 SEBI (Merchant Bankers) Regulations 1992

 SEBI (Foreign Institutional Investors) Regulations, 1995
 SEBI (Venture Capital Funds) Regulations, 1996
 SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 and
 SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992

Procedure for Listing on the BSE SME Exchange:

Step 1: Appointment of Merchant Banker

A Merchant Banker must be appointed by the company for the listing on the BSE SME
exchange.

Step 2: Due diligence and Documentation

The Merchant Banker should conduct a due diligence regarding the Company i.e. checking the
documentation including all the financial documents, material contracts/agreements, Government
Approvals, Promoter details etc. and preparing the documentation for the IPO. Planning and
documentation by the Merchant Banker must include

 IPO structure,
 issuance of shares and
 other financial requirements.

Step 3: Application to BSE SME Exchange

 Submission of DRHP/Draft Prospectus

Merchant Banker has to prepare documents which shall be filed with the Exchange as well as
with SEBI as per requirements.

 Verification & Site Visit

BSE verifies the documents and processes the same. A visit to the company’s site shall be
undertaken by the Exchange official. The interview is to be conducted by Promoters and Listing
Advisory Committee.

 Approval
All the requirements are compiled by the Issuer Company in respect of BSE listing process
issues an In-Principle approval on the recommendation of the Committee.

 Filing of DRHP/Prospectus

Merchant Banker has to file these documents with the ROC indicating the opening and closing
date of the issue. Once approval is received from the ROC, the opening dates of the issue along
with the required documents have to be intimated to the Exchange by him.

Step 4: Initial Public Offer (IPO)

The IPO opens and closes as per schedule. After the closure of IPO, the Company submits the
documents as per the checklist to the Exchange for finalization of the basis of allotment.

Step 5: Post Listing

BSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.

Documents Required for Listing on the BSE SME Exchange

1. Copies of draft offer document
2. Soft copy of the prospectus for uploading on website
3. PAN &TAN of the company
4. DIN & PAN of promoter and directors
5. Articles & Memorandum of Association of the Company
6. Balance Sheets, Profit & Loss Accounts, and Cash Flow Statements
7. Copy of resolution passed by the Board of Directors for issue of securities
8. Copy of the shareholder’s resolution under 62(1)(c) of Companies Act, 2013
9. Such other documents are required from time to time as per schedule.

If you want to avail any service in respect of the SME Listing, Interslice will provide you the
tailor-made services and end to end processing regarding the same. For more information, visit
our website www.enterslice.com or email us at info@enterslice.com.
 Eligibility Criteria

Conditions Precedent to Listing

The Issuers on SME platform shall have adhered to

conditions precedent to listing as emerging, inter-alia, from

Securities Contracts (Regulations) Act 1956,

Companies Act 1956,
Securities and Exchange Board of India Act 1992,
Any rules and/or regulations framed under foregoing
statutes, as also any circular, clarifications, guidelines issued
by the appropriate authority under foregoing statutes.

Eligibility criteria for listing on NSE Emerge Platform

The following criteria should be complied with as on the

date of filing the Public Offer Document with NSE as well as
when the same is filed with RoC and SEBI.
Parameter Listing Criterion
 Incorporation The Issuer should be a company
incorporated under the Companies Act 1956 / 2013 in India.
Post Issue paid up Capital The post issue paid up capital of
the company (face value) shall not be more than Rs. 25
crore.
Track record

Track record of atleast three years of either

i. the applicant seeking listing; or

ii. the promoters****/promoting company, incorporated

in or outside India or

iii.Proprietary / Partnership firm and subsequently

converted into a Company (not in existence as a Company
for three years) and approaches the Exchange for listing.

****Promoters mean one or more persons with minimum

3 years of experience in the same line of business and shall
be holding at least 20% of the post issue equity share capital
individually or severally
 The company/entity should have positive cash accruals
(earnings before depreciation and tax) from operations for
atleast 2 financial years preceding the application and its
net-worth should be positive.

Other Listing conditions

The applicant Company has not been referred to Board

for Industrial and Financial Reconstruction (BIFR).
No petition for winding up is admitted by a Court of
competent jurisdiction against the applicant Company.
No material regulatory or disciplinary action by a stock
exchange or regulatory authority in the past three years
against the applicant company.

Disclosures The following matters should be disclosed in

the offer document:

Any material regulatory or disciplinary action by a stock

exchange or regulatory authority in the past one year in
respect of promoters/promoting company(ies), group
companies, companies promoted by the
promoters/promoting company(ies) of the applicant
company.
 Defaults in respect of payment of interest and/or principal
to the debenture/bond/fixed deposit holders, banks, FIs by
the applicant, promoters/promoting company(ies), group
companies, companies promoted by the
promoters/promoting company(ies) during the past three
years. An auditor's certificate shall also be provided by the
issuer to the exchange, in this regard.
The applicant, promoters/promoting company(ies), group
companies, companies promoted by the
promoters/promoting company(ies) litigation record, the
nature of litigation, and status of litigation.
In respect of the track record of the directors, the status of
criminal cases filed or nature of the investigation being
undertaken with regard to alleged commission of any offence
by any of its directors and its effect on the business of the
company, where all or any of the directors of issuer have or
has been charge-sheeted with serious crimes like murder,
rape, forgery, economic offences etc.
 How to List on BSE SME Exchange – Listing Requirements

The BSE SME Exchange has been setup by the Bombay Stock Exchange (BSE) to provide Small
and Medium Sized Enterprises (SMEs) a platform for raising equity capital for their growth and
expansion. SMEs are the backbone of a nation’s economy and Indian SMEs provide employment
to 70 million people through 30 million enterprises. In 2010, The Prime Minister’s Task Force
recommended the setting up of a dedicated Stock Exchange for SMEs and SEBI also laid down
the regulations for the governance of a SME Exchange. Based on the above, the BSE SME
Exchange was established to provide opportunity to Entrepreneurs to raise equity capital for the
growth and expansion of SMEs. In this article, we look at how to list on the BSE SME Exchange
with listing requirements.tor.

BSE SME Exchange – Listing Requirements

The following are the listing requirements for the BSE SME Exchange:

1. The SME must be a Limited Company.

2. The issuer or SME must have a post-issue face value capital of Rs.1 crore to Rs.25 crores. Entities
having a post-issue face value of over Rs.25 crores has to be necessarily listing on the Main
Board of the BSE.
3. Net Tangible Assets of the SME must be atleast Rs.1 crore, as per latest audited financial results.
4. Net Worth (excluding revaluation reserve) must be atleast Rs.1 crore as per the latest audited
financial statements.
5. The company must have a track record of distributable profits in terms of Section 205 of the
Companies Act, 1956, for atleast two out of the immediately preceding three financial years.
Otherwise, networth must be atleast Rs. 3 crores.
6. The company must mandatorily facilitate trading in DEMAT securities and enter into agreement
with both Depositories, namely, Central Depository Services Limited and National Securities
Depository Limited.
7. The company must have a website.
8. The company should not have any reference before the Board for Industrial and Financial
Reconstruction (BIFR).
9. The company should not have any winding up petition that has been accepted by a Court.
10. The issue must be a 100% underwritten issue. Merchant Banker must underwrite 15% on their
own accounts.
11. The Merchant Banker to the issue is responsible for market making for a minimum of three
years through a stock broker who is registered as market maker with the SME Exchange.
12. The company must have a minimum of 50 investors while listing through IPO.
Procedure for listing on BSE SME Exchange

Procedure for Listing on the BSE SME Exchange

Listing on the BSE SME Exchange involves five different steps, namely:

Step 1: Appointment of Merchant Banker

The issuer Company must consult and appoint a Merchant Banker in an advisory capacity for the
listing on the BSE SME exchange.

Step 2: Due Diligence and Documentation

The Merchant Banker would then conduct a due diligence regarding the Company i.e checking
the documentation including all the financial documents, material contracts, Government
Approvals, Promoter details etc. and prepare documentation for the IPO. Planning and
documentation by the Merchant Banker must include IPO structure, share issuances and financial
requirements

Step 3: Application to BSE SME Exchange

Once the due-diligence and documentation is completed by the Merchant Banker, the draft
prospectus and DRHP is submitted to the Exchange as per SEBI requirements.

After submission of the required application and documents to BSE, BSE verifies the documents
and processes the same. A visit to the company’s site is also undertaken by the BSE Exchange
Officials. Post site visit, the Promoters are called for an interview with the Listing Advisory
Committee.

On satisfactory completion of the site visit and interview by BSE officials, BSE issues an in-
principle approval on the recommendation of the Committee, provided all the requirements are
compiled by the issuer Company. On obtaining in-principle approval, the Merchant Banker
would file the Prospectus with the ROC indicating the opening and closing date of the issue. On
obtaining approval from ROC, they intimate the Exchange regarding the opening dates of the
issue along with the required documents.

Step 4: Initial Public Offering (IPO)

The Initial Public Offer (IPO) opens and closes as per schedule. After the closure of IPO, the
company submits the documents as per the checklist to the BSE SME Exchange for finalization
of the basis of allotment. On completion of the allotment, BSE issues the notice regarding listing
and trading.

Trading on the BSE SME Exchange

After listing on the BSE SME exchange, existing members of the Exchange are eligible to
participate in SME Platform and trade on the share of the SME. However, trading on the SME
exchange is constrained by the following trading lot sizes:

 The minimum application and trading lot size shall not be less than Rs. 1,00,000/-
 The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be less than Rs
1,00,000/-
 The investors holding with less than Rs 1,00,000/- shall be allowed to offer their holding to the
Market Maker in one lot.
 However in functionality the market lot will be subject to revival after a stipulated time.

Documents Required for Listing on the BSE SME Exchange

A. Along with the application for using the name of the Exchange in the offer document, the
following documents/information shall to be filed by the Company with the Exchange:
1. 10 copies of the draft offer document.
2. Soft copy of the Prospectus for uploading on website
3. Copy of resolution passed by the Board of Directors for issue of securities
4. Copy of the shareholders resolution under 62(1)(c) of Companies Act, 2013
5. Certificate from the Managing Director / Company Secretary or PCS / Statutory or Independent
Auditors stating the following:
1. The Company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR).
2. There is no winding up petition against the company, which has been admitted by the
court or a liquidator has not been appointed.
3. There has been no change in the promoter/s of the Company in the preceding one year
from date of filing application to BSE for listing on SME segment.
6. Copy of all show cause notice(s)/order(s) issued by any regulatory authority (e.g. SEBI, ROC, RBI,
CLB, Stock Exchange etc.) & Correspondence there to.
7. PAN & TAN of the Company.
8. DIN & PAN of Promoters and Directors.
9. Printed Balance Sheets, Profit & Loss Accounts and Cash Flow Statements for the preceding 5
years (or for such applicable periods)
10. Copies of major orders/contracts/ received/ executed/ in-hand should be kept ready and be
available for inspection. A statement of material contracts duly certified by a practicing
Chartered Accountant/ practicing Company Secretary should be submitted. The Company
should also state the place, time and date where these documents can be inspected
11. A statement containing particulars of the dates of, and parties to all the material contracts,
agreements (including agreement for technical advice and collaboration), concessions and
similar other documents (except those entered into in the ordinary course of business carried on
or intended to be carried on by the company) together with a brief description of the terms,
subject matter and general nature of the documents.
12. Details if the present or any previous application of the Company/Group Company for listing of
any securities has been rejected earlier by SEBI or by any stock exchange and reasons thereof.
13. Name of the exchange which is proposed to be designated Exchange for the issue, if decided.
14. Copies of agreements and memoranda of understanding between the Company and its
promoters/ directors.
15. Articles & Memorandum of Association of the Company.
16. A certificate from the statutory auditor/practicing chartered accountant certifying compliance of
conditions of Corporate Governance as stipulated in clause 52 of the listing agreement and
circular no.SEBI/CFD/DIL/CG/1/2004/12/10 dated October 29, 2004 issued by the Securities and
Exchange Board of India (SEBI). The company should also give the composition of various
committees as required under the said clause.
17. Association, if any, of the directors/ promoters of the Company with any public or rights issue
made during the preceding 10 years.
18. One Time Listing Fees of Rs. 50,000/- plus applicable Service Tax.(Details of all applicable fees for
SME Listing is attached)
19. Date of opening of public issue to be intimated as soon as it is finalized.
ARTICLE ON SME LISTING

I. Introduction of BSE SME Platform

Small and medium enterprises (SMEs) in developing countries like India are the backbone of the
nation’s economy. They constitute the bulk of the industrial base and also contribute
significantly to their exports as well as to their Gross Domestic Product (GDP) or Gross National
Product (GNP). Micro, Small and Medium Enterprises (MSMEs) contributes 8% of the country’s
GDP, 45% of the manufactured output and 40% of our exports. MSME sector forms the largest
generator of employment to about 6 Crores people through 2.6 Crores enterprises. It forms a
major portion of the Industrial Activity. BSE Ltd has set up the BSE SME Platform as per the
rules and regulations laid down by SEBI. BSE SME Platform offers an entrepreneur and investor
friendly environment, which enables the listing of SMEs from the unorganized sector scattered
throughout India, into a regulated and organized sector.

II. WHY BSE SME?

The listed SMEs will step into the threshold of BSE SME Platform and foray in to the world of
finance for further growth and development. BSE SME will assist these SMEs to raise equity
capital for their growth and expansion and thus help them blossom into full fledged companies.
In due time enable them to migrate into the main board of BSE as per the existing rules and
regulations.

BSE SME will provide immense opportunities to the following market participants:

Entrepreneurs

To raise equity capital for growth and expansion of SMEs in a cost effective manner.

Investors

Opportunities to identify and invest in good companies at an early stage, long term Capital Gain
tax benefit and Exit Route.

III. Tax Benefits

Tax Benefits Shares listed on BSE SME Unlisted Shares

Long Term Capital Gains Tax 0% 20% after indexation

Short Term Capital Gains Tax 15% 30%

IV. Benefits of Listing

 Easy access to Capital

BSE SME provides an avenue to raise capital through equity infusion for growth oriented SME’s.
 Enhanced Visibility and Prestige
The SME’s benefit by greater credibility and enhanced financial status leading to demand in the
company’s shares and higher valuation of the company.
 Encourages Growth of SMEs
Equity financing provides growth opportunities like expansion, mergers and acquisitions thus
being a cost effective and tax efficient mode.
 Ensures Tax Benefits
In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term
Capital Gains Tax.
 Enables Liquidity for Shareholders
Equity financing enables liquidity for shareholders, provides growth opportunities like
expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode.
 Equity financing through Venture Capital
Provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing
their lock in period.
 Efficient Risk Distribution
Capital Markets ensure that the capital flows to its best uses and that riskier activities with
higher payoffs are funded.
 Employee Incentives
Employee Stock Options ensures stronger employee commitment, participation and recruitment
incentive.

V. Listing Procedure

The 5 P'S of Listing Process on BSE SME

1. Planning
The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.
2. Preparation
The Merchant Banker prepares the documentation for filing after:
o conducting due diligence regarding the Company i.e checking the documentation
including all the financial documents, material contracts, Government Approvals,
Promoter details etc.
o and planning the IPO structure, share issuances, and financial requirements
3. Process

Application procedure:

o Submission of DRHP/Draft Prospectus - These documents are prepared by the Merchant

Banker and filed with the Exchange as well as with SEBI as per requirements.
o Verification & Site Visit - BSE verifies the documents and processes the same. A visit to
the company's site shall be undertaken by the Exchange official .The Promoters are
called for an interview with the Listing Advisory Committee.
 o Approval - BSE issues an In Principle approval on the recommendation of the
Committee, provided all the requirements are compiled by the Issuer Company.
o Filing of RHP/Prospectus - Merchant Banker files these documents with the ROC
indicating the opening and closing date of the issue.
o Once approval is received from the ROC, they intimate the Exchange regarding the
opening dates of the issue along with the required documents.
4. Public Offering
The Initial Public Offer opens and closes as per schedule. After the closure of IPO, the Company
submits the documents as per the checklist to the Exchange for finalization of the basis of
allotment.
5. Post Listing
BSE finalizes the basis of allotment and issues the notice regarding listing and trading.

VI. Criteria of Listing on SME Platform of BSE

1. The Company shall be incorporated under the Companies Act, 1956.

2. Post-issue paid up capital of the company shall be at least Rs. 3 crore.
3. Net Tangible assets of at least Rs. 3 crores as per the latest audited financial results
4. Net worth (excluding revaluation reserves) of at least Rs. 3 crores as per the latest audited
financial results
5. Track record of
o Distributable profits in terms of Section 123 of the Companies Act 2013 for at least two
years out of immediately preceding three financial years (each financial year has to be a
period of at least 12 months). Extraordinary income will not be considered for the
purpose of calculating distributable profits.

Or

o The net worth shall be at least Rs.5 crores.

6. Other Requirements
o It is mandatory for a company to have a website.
o It is mandatory for the company to facilitate trading in demat securities and enter into
an agreement with both the depositories.
o 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.
7. Certificate from the applicant company / promoting companies stating the following:
1. 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.
2. There is no winding up petition against the company that has been accepted by a court.
8. 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.
9. Migration from BSE SME Exchange to the main Board of BSE:
The companies seeking migration to Main Board of BSE should satisfy the eligibility criteria. It is
mandatory for the company to be listed and traded on the BSE SME Platform for a minimum
period of two years and then they can migrate to the Main Board as per the guidelines specified
 by SEBI vide their circular dated 18th May, 2010 and as per the procedures laid down in the
ICDR guidelines Chapter X B.

VII. Guidelines for Listing

SEBI has time to time issued the circulars and guidelines for setting up of the exchange for small
and medium enterprises. These circulars have been revised after taking suggestions from market
participants for the SME Platform. The final circular was issued on 18th May, 2010.The
necessary provisions for the listing of specified securities under the SME Platform have been
made in the Chapter XA of Issue of Capital and Disclosure Requirements (ICDR).

The guidelines emphasis on the following:

 The post issue face value capital should not exceed Rupees Twenty Five Crores.
 The minimum application and trading lot size shall not be less than Rs. 1, 00,000/-
 The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be less than Rs
1,00,000/-.
 The investors holding with less than Rs 1,00,000/- shall be allowed to offer their holding to the
Market Maker in one lot.
 The existing members would be eligible to participate in SME Platform.
 The issues shall be 100% underwritten and merchant bankers shall underwrite 15% in their own
account.

SEBI has compulsorily mandated market making for all scrips listed and traded on SME
Platform.

The obligations for market makers are as follows:

 The merchant bankers to the issue will undertake market making through a stock broker who is
registered as market maker with the SME Platform.
 The merchant bankers shall be responsible for market making for a minimum period of 3 years.
 The market makers are required to provide two-way quote for 75% of the time in a day. The
same shall be monitored by the exchange.
 There will not be more than 5 market makers for a scrip.
 Market makers will compete with other market makers for better price discovery.
 The exchange shall prescribe the minimum spread between the bid and ask price.
 During the compulsory market making period, the promoter holding shall not be eligible for the
offering to market makers.
 Market Maker shall be allowed to deregister by giving one month notice to the exchange.
 Trading system may be either order driven or quote driven.

The application and trading lot size is being kept at Rs. 1, 00,000/- so as to curtail the entry of
retail investors. It has also been stated that the minimum depth shall be of one lakh rupees and at
any point of time it cannot go below that amount. The investors holding with value less than Rs.
1, 00,000/- shall be allowed to offer their holding to the market maker in one lot. However, in
functionality the market lot will be subject to revival after a stipulated time.