BSE SME IPO Eligibility Criteria

This IPO News guide/article covers “BSE SME IPO Eligibility Criteria”. The page is organized around 1. sme incorporation, 2. post issue paid-up capital, 3. net worth, 4. net tangible assets, 5. company age or minimum track record. IPO News presents the structured facts and tables in its own layout and wording.

Topics Covered

• 1. SME Incorporation
• 2. Post Issue paid-up capital
• 3. Net Worth
• 4. Net Tangible Assets
• 5. Company age or minimum Track Record
• 6. Profitability Criteria for listing on BSE SME
• 7. Leverage Ratio
• 8. Disciplinary Action
• 9. Name Change
• 10. SME IPO Offer for Sale
• 11. Restrictions on use of funds raised through SME IPO
• 12. Other Requirements
• SME IPO Enquiry
• Frequently Asked Questions
• 1. Can HUF and LLP issue SME IPO?−
• 2. Who is eligible to issue SME IPO?+
• 3. What should be the net tangible assets to list on the NSE Emerge?+
• 4. Can broking companies list on the BSE SME platform?+
• 5. What are the key requirements for SME IPO listing?+
• 6. What are the extra compliance requirements for SME IPOs compared to the main board listing?+
• 7. Can a newly incorporated SME issue IPO?+
• 8. What are the key financial parameters for SME to list on BSE SME?+
• 9. Should SMEs be profitable to go public?+
• 10. What are the differences in the eligibility norms for SME IPO at BSE and NSE?+
• Compare Stock Brokers Side-by-Side

Key Facts

• India's trusted financial research platform since 2015. Live IPO GMP, subscription data, allotment status, Rights Issues, NCDs and unbiased stock broker reviews.
• Let’s discuss 10 key requirements for listing on the BSE SME exchange in detail;
• To list on the BSE SME, the company must be incorporated under the Companies Act 1956.
• SME owners who are running a sole proprietorship or partnership firm must first convert the business structure into a Public Limited company to be eligible to raise funds through the BSE SME platform. Know more.
• Listing on SME exchange requires companies to have post-issue paid-up capital of not more than Rs 25 crore. Post-issue paid-up capital is the total paid-up capital of a company after the IPO is issued.
• If the paid-up capital exceeds the limit of Rs 25 crore, the company has to list on the mainboard exchange.
• As per the BSE SME exchange criteria, SMEs must have at least Rs 1 crore net worth for 2 preceding full financial years.
• If an SME is formed through the conversion of a proprietorship or partnership or LLP firm then also the company must report the net worth of Rs 1 crore for 2 preceding full financial years.
• Net worth is the sum of total assets net of total liability a company owes. Net worth will be computed as per the SEBI ICDR Regulations.
• The minimum net tangible assets required is Rs 3 crore.
• Yes, SMEs desirous to list on BSE SME must report net tangible assets of at least Rs 3 crore or more as per the audited financial statements of the preceding financial year.
• Earlier, it was Rs 1 crore but in November 2023, BSE revised the limit to Rs 3 crore.
• SMEs seeking to list IPO should have operational existence for at least 3 years. It means that the company must have been operating for the last 3 years or more.
• Yes, companies having a track record of 3 years but failing to meet the profitability requirements do not qualify for BSE SME IPO. This is because companies must be on a profitable operating basis to bring SME IPO.
• The exchange criteria of BSE SME platform requires SME owners/promoters to meet the below conditions to satisfy profitability criteria;
• Out of three audited financial years, SMEs must have at least Rs 1 Crore operating profit (EBITDA) from operations for any 2 out of 3 latest financial years before the IPO application is filled.
• As far as companies are concerned about the leverage ratio, it should not be more than 3:1. Thus, SMEs maximum debt funding in an SME can be 3 times that of equity capital used.
• If the company has changed its name in the last one year, at least 50% of the total revenue for the latest 1 full financial year must be earned from the business activities under the new name.
• It means that the new business name has contributed to 50% of total revenues in the preceding 1 full financial year on a restated and consolidated basis.
• SME IPO via OFS is restricted to a maximum 20% of the IPO issue size.
• Selling shareholders cannot sell more than 50% of their shareholding in the company.
• Funds to be used to meet general corporate purposes is capped at 15% or Rs 10 crore, whichever is lower.
• Promoters minimum contribution is locked in for 3 years, and 50% of excess of minimum promoter contribution is locked in for 1 year and remaining 50% is locked for 2 years.
• The company’s promoters should not be changed in the preceding one year from the date of the IPO application filed to the BSE SME.
• he board composition must comply with the Companies Act 2013.
• 3 years of operational track record
• Post-issue paid-up capital is maximum Rs 25 crores
• Profitable business and positive net worth in any 2 of last 3 years
• Yes, as per the BSE circular in April 2017, Stock or commodity Broking companies and Micro Finance companies are eligible to get listed on the SME platform of BSE provided that they meet the eligibility criteria.
• BSE SME Eligibility criteria for broking companies

Data Tables

Source record: View original public source ↗