The Securities and Exchange Board of India (Sebi) has notified guidelines for a separate exchange or a platform for small and medium enterprises (SMEs) and also for companies that wish to list in the SME segment.
In November last year, the market regulator had announced the draft norms. The guidelines released today incorporate changes based on comments from various market participants.
A post-issue upper limit of Rs 25 crore capital at face value has been fixed for a company that intends to list in the segment. If a company's post-issue face value capital is less than Rs 25 crore, a further issue of shares will be allowed, provided the new capital does not exceed Rs 25 crore.
Companies listed in the segment will be compulsorily shifted to the main board of the exchange after exceeding the Rs 25-crore post-issue paid-up capital limit. The minimum lot size for trading on the stock exchange has been fixed at Rs 1 lakh.
Also, merchant bankers who have the responsibility of market making may be represented on the board of the company, subject to an agreement with the issuer. While the merchant banker shall be responsible for market making for a minimum period of three years from the date of listing of the shares, Sebi has clarified that promoters' holding will not be eligible for a market offer. The issue also needs to be 100 per cent underwritten. Also, the merchant bankers have to underwrite 15 per cent of the issue in their own account.
Easier norms for result declaration
Moreover, companies that intend to list in the segment will not be required to submit financial numbers every quarter. They also don’t have to send the complete annual report. In a separate circular on Tuesday, the regulator said such entities could send only a statement containing the salient features of all the documents as required by the regulations instead of sending full annual reports to their share holders.
Further, periodical financial results may be submitted on a half-yearly basis rather than on a quarterly basis. Companies listed on the SME exchange also need not publish their financial results, as required on the main board. They can make it available on their website. The market regulator highlighted the fact that it wants to encourage promotion of dedicated exchanges and/or dedicated platforms of the exchanges for listing and trading of securities issued by SMEs.
Brokers need not register afresh
On a different note, Sebi has done away with the earlier norm that brokers desirous of trading on the SME platform need to obtain fresh registration. “A stock broker of the main board need not obtain fresh registration for trading on SME platform of such main board,” the Sebi circular said. Even a sub-broker need not obtain fresh registration if he is affiliated to a stock broker eligible to trade on the SME platform. Meanwhile, only demutualised and corporatised exchanges with nationwide trading terminals can apply for an SME exchange or a platform and the balance sheet networth has to be at least Rs 100 crore.
