SME LISITING

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SEBI NORMS
In order to lay down the policy for issue, listing and trading of securities to be issued by SMEs, necessary amendments have been made in the SEBI ICDR Regulations and consequent amendments have been made into various other regulations
  • SEBI (Merchant Bankers) Regulation 1992
  • SEBI (Foreign Portfolio Investors) Regulations, 2019
  • SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011
  • SEBI (Stock Brokers) Regulations, 1992
  • SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015
  • SEBI has, from time to time, issued the circulars and guidelines for setting up of the SME platform and has inserted Chapter IX “Initial Public Offer by Small and Medium Enterprises” under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.
 

The necessary provisions for listing of specified securities under the SME Platform vide the above regulations and circulars are enumerated in brief:
The post issue face value capital should not exceed INR Twenty Five Crores (INR 25 Crore).
The minimum application and trading lot size shall not be less than INR 1,00,000/-
The issues shall be 100% underwritten and merchant bankers shall underwrite 15% on their own account.

Besides, SEBI has compulsorily mandated market making for all scrips listed and traded on SME Platform. The obligations of market making are as follows:

  • The Market Maker shall be required to provide a 2-way quote for 75% of the time in a day.
  • The minimum depth of the quote shall be Rs.1,00,000/-. However, the investors with holdings of value less than Rs 1,00,000 shall be allowed to offer their holding to the Market Maker in that scrip provided that he sells his entire holding in that scrip in one lot along with a declaration to the effect to the selling broker.
  • Execution of the order at the quoted price and quantity must be guaranteed by the Market Maker, for the quotes given by him.
  • There would not be more than five Market Makers per scrip.
  • The Market Maker may compete with other Market Makers for better quotes to the investors.
  • The Market Maker has to start providing quotes from the day of the listing / the day for the respective scrip and shall be subject to the guidelines laid down for market making by the exchange.
  • The Market Maker has to act in that capacity for a period of three years.

The application and trading lot size is being kept at INR 1,00,000/- so as to curtail the exposure 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 INR 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.

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