SEBI tightens SME IPO norms, mandates a minimum operating profit

SEBI has approved new SME IPO norms, mandating a minimum operating profit and restricting selling shareholders' offloading to 50%. The board has noted that a SME issuer now needs a minimum operating profit (earnings before interest, depreciation and tax) of Rs 1 crore for any of the two out of three previous financial years. Related party-transactions (RPT) norms, which are now applicable only to entities listed on the Main Board, will also be applicable to SME segment now. SEBI noted that amount being raised for General Corporate Purpose (GCP) will be capped at 15 per cent of the total or Rs 10 crore, whichever is lower. SME issues will not be permitted if their object is repayment of loan from promoter, promoter group or any related party, directly or indirectly. Lock-in on promoters holding held in excess of minimum promoter contribution (MPC) can only be now released in a phased manner, according to the board. The lock-in for 50 per cent of promoters holding in excess of MPC shall be released after one year and lock-in for remaining 50 percent promoters holding in excess of MPC can be released after two years.

Powered by Capital Market - Live News