Once IPO fever takes hold, listing on a stock exchange is an aspiration shared by nearly every small business owner. It could also be the biggest challenge. The long wait for initial public offering (IPO) approval could make the founder’s dream to reach the public markets a nightmare. There are several steps involved in the approval of an IPO for a firm. The Startup India Action Plan has eased the SME IPO listing process because the desire to raise capital through an IPO has become a reality for small and medium-sized enterprises (SMEs) in India. In this blog, we discuss the eligibility criteria for small and medium enterprises’ initial public offerings.
SMEs are small and medium enterprises that play a vital role in the economy by providing employment, driving innovation, and contributing to exports. In India, SMEs account for 45% of the industrial output, and 40% of the exports employ over 60 million people.
To be eligible for a small and medium enterprise’s initial public offering, a company must meet the following criteria:
• The company must be a small or medium-sized enterprise as defined by the Securities and Exchange Commission.
• The company must have a minimum of three years of financial statements that have been audited by a certified public accountant.
• The company must have a minimum of two years of operating history.
• The company must have a minimum of $2 million in total assets.
• The company must have a minimum of $1 million in annual revenue.
To be eligible for a small and medium enterprise initial public offering (SME IPO) on the National Stock Exchange of India (NSE) or the Bombay Stock Exchange (BSE), a company must first meet the following criteria:
The BSE listing criteria are as follows:
• The company must have a minimum paid-up capital of Rs. 4 crores.
• It must have a minimum market capitalization of Rs. 20 crores.
• It must have a minimum of 1,000 shareholders.
• It must have a minimum public float of 25%.
The NSE listing criteria are as follows,
• The company must have a minimum paid-up capital of Rs. 4 crores.
• It must have a minimum market capitalization of Rs. 40 crores.
• It must have a minimum of 2,000 shareholders and a minimum public float of 25%.
In addition to meeting the above listing requirements, companies must also adhere to several other rules and regulations set forth by the BSE and NSE. These include requirements for corporate governance, financial disclosure, and more.
All you need to know about SME IPO
An SME IPO is an initial public offering made by a small or medium-sized enterprise. To list on either the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE), an SME must meet certain eligibility criteria as mentioned above.
The SME IPO process is relatively simple. The company first files a draft red herring prospectus with the Securities and Exchange Board of India (SEBI). Once the SEBI gives its approval, the company can then file its final prospectus and begin marketing the IPO to potential investors. The company must then allocate the shares to investors and list them on the exchange.
The SME IPO market has been growing in recent years, with more and more companies tapping into this financing option. This is due to the many benefits that an IPO offers, such as increased visibility, improved liquidity, and lower borrowing costs.
If you are a small or medium-sized enterprise looking to raise capital, an SME IPO may be the right option for you.
What is NSE & BSE?
NSE is the National Stock Exchange of India, the leading stock exchange in the country. NSE offers a platform for trading in equity, debt, and derivatives. It is a fully automated, screen-based exchange that offers fair and transparent price discovery. NSE is the first exchange in India to offer electronic trading capabilities.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two main stock exchanges in India. Both exchanges offer a platform for the trading of stocks and other securities. The BSE is the older of the two exchanges, having been founded in 1875. The NSE was founded in 1992. Both exchanges are based in Mumbai.
The BSE is the larger of the two exchanges, with a market capitalization of over $2 trillion. The NSE has a market capitalization of over $1 trillion. Both exchanges offer a wide range of services, including trading, clearing, and settlement. They also provide a platform for the listing of companies and other securities.
The BSE and NSE are regulated by the Securities and Exchange Board of India (SEBI). SEBI is the primary regulator of the securities market in India. It is responsible for the regulation of the stock exchanges, the listing of companies, and the protection of investors.
Making your favourite business a part of your portfolio is a dream for most investors. But it is only possible if the company is listed on the stock exchange. The Small and Medium Enterprise (SME) Act was formed to include small and medium businesses in the stock market, which otherwise was dominated by big and well-known corporate groups. This act brought many businesses with the potential for growth into the stock market and has allowed SMEs to build IPO portfolio. We hope you are well informed about what an SME IPO is and its eligibility criteria now.
