With a view to facilitate the necessary provisions needed for SME Exchange, amendments have been made to the SEBI ICDR Regulations and a separate Chapter IX has also been inserted therein. The regulations emphasized on the following :
In order to get listed on SME Exchange, the paid up capital of the issuer company shall be less than or equal to 10 Crore rupees.
The Draft offer document is required to be filed with the Exchange for getting In-Principal approval and thereafter the offer document is required to be filed with SEBI along with due-diligence certificate
Underwriters to the issue under Chapter IX shall ensure that the issue is 100% underwritten and that a disclosure to that effect is made to SEBI.
Minimum application size in an SME IPO is fixed at INR 100,000 per application as opposed to the minimum application
A listed issuer whose post-issue paid-up capital is less than INR 25 Crore has an option to migrate to the SME Exchange, and shall comply with the exchange criteria.
Companies Listed on the SME Exchange whose post issue face value capital is more than Rs.10 Crores and upto Rs. 25 Crores may migrate to Main Board of the Exchange
The lead manager to the issue shall ensure compulsory market-making through the stock brokers of the SME exchanges, appointed by the Company for a minimum period of 3 years from the date of listing of the securities or from the date of migration from the main board as per Regulation 276 of SEBI (ICDR), 2018.
SEBI in order to encourage the promotion of dedicated exchanges and/or dedicated platforms of the exchange for listing and trading of securities issued by Small and Medium Enterprises (“SME”), and in order to facilitate the listing of specified securities in the SME Exchange, has facilitated “Model Listing Agreement”
In order to get listed on SME Exchange, the paid up capital of the issuer company shall be less than or equal to 10 Crore rupees. Those issuer companies, whose post-issue paid-up capital lies between INR 10 Crore and up to INR 25 Crore, also have the option to list their securities under the provisions of Chapter IX of SEBI ICDR Regulations.
The Draft offer document is required to be filed with the Exchange for getting In-Principal approval and thereafter the offer document is required to be filed with SEBI along with due-diligence certificate as per Form A of Schedule V including additional confirmations as provided in Form G of Schedule V. The Offer Document in relation to the issue shall also be filed with the SME Exchange and the jurisdictional Registrar of Companies. It has been specifically mentioned that SEBI will not scrutinize the Draft offer document of an SME IPO.
Underwriters to the issue under Chapter IX shall ensure that the issue is 100% underwritten and that a disclosure to that effect is made to SEBI, a day prior to the opening of the issue. A minimum of 15% of the issue size is mandated to be underwritten by the Merchant Bankers on their own account(s). Certain Nominated Investors may be permitted to enter into contractual arrangements with the Merchant Bankers to share the burden of devolvement of underwriting obligations. If the underwriter(s) fail to fulfil their underwriting obligations or the nominated investors fail to subscribe to the unsubscribed portion, the lead manager(s) shall fulfil the underwriting obligations.p>
Minimum application size in an SME IPO is fixed at INR 100,000 per application as opposed to the minimum application value ranging from INR 10,000 to INR 15,000 per application under Main Board IPO. Further, the minimum number of allotees in an SME IPO should be at least 50.
Companies Listed on the SME Exchange whose post-issue face value capital is more than ten crore rupees and upto twenty five crore rupees may migrate to Main Board of the Exchange after complying with the migration requirements of the Exchange. Further, Companies shall compulsorily migrate to the Main Board of the Stock Exchanges if their post-issue share capital is in excess of INR 25 Crore. Upon the performance of any rights issue/ preferential issue/ bonus issue which results in triggering of the above limit, then such company would have to compulsorily migrate to the Main Board. Such companies shall, therefore, be required to comply with the provisions of the Listing Agreement of the Main Board and all regulatory requirements including compliance with SEBI ICDR Regulations for the purposes of the same.
The lead manager to the issue shall ensure compulsory market-making through the stock brokers of the SME exchanges, appointed by the Company for a minimum period of 3 years from the date of listing of the securities or from the date of migration from the main board as per Regulation 276 of SEBI (ICDR), 2018. The securities being bought and sold as part of the market making shall get transferred to the Nominated Investor. During the compulsory market-making period, the market makers are restricted from buying any securities from the promoters/ promoter group of the issuer or any other acquirer. However, the promoters’ shareholding which is not locked in may be traded with the prior permission of the SME Exchange. In case, the value of the shareholding of a shareholder falls below INR 1 lakh, for any reason whatsoever, the market maker is obligated to buy the entire shareholding of such shareholder in a single lot. Acquisitions of shares by the merchant bankers / market makers are exempted from the SEBI Takeover Code, provided that such merchant bankers/ market makers do not have the intention of taking over the management and there is no resultant change in control (direct or indirect) of the issuer company.
SEBI in order to encourage the promotion of dedicated exchanges and/or dedicated platforms of the exchange for listing and trading of securities issued by Small and Medium Enterprises (“SME”), and in order to facilitate the listing of specified securities in the SME Exchange, has facilitated “Model Listing Agreement” to be executed between the issuer and the stock exchange. As described above, any Company desirous of listing its specified securities on the SME platform of any stock exchange namely National Stock Exchange of India Limited (NSE) or BSE Limited shall along with SEBI (ICDR) Regulations, 2018 also comply with the listing requirements of the respective stock exchanges
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