Benefits of SME Listing

How does the SME exchange benefit the Small and Medium Enterprises (SME)

  • Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund new projects / undertake expansions / diversifications and for acquisitions.
  • This mode of fund raising through infusion of equity can help the Companies to raise borrowed funds at efficient rate.
  • Equity financing lowers the debt burden leading to lower financing costs and healthier balance sheets for the firms.
  • Listing also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees. SME Listing channelizes meaningful Schemes. Listing pre supposes good Corporate Governance which results in sustainability of the Company.
  • Listing also helps generate an independent valuation of the company by the market.
  • Listing raises a company's public profile with customers, suppliers, investors, financial institutions and the media.
  • A listed company is typically covered in analyst reports and may also be included in one or more of indices of the stock exchanges.
  • An initial listing increases a company's ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutional Placements and ADRs / GDRs / FCCBs, and in the process attract a wide and varied body of institutional and professional investors.
  • Listing leads to better and timely disclosures and thus also protects the interest of the investors.
  • Listing provides a continuing liquidity to the shareholders of the entity. This in turn helps broaden the shareholder base.
  • Listed companies generally find that the market perception of their financial and business strength is enhanced.
  • Tax Benefits -
    • The sale of unlisted shares in short term attract the capital gain tax upto 30% as applicable to the tax payer and the long term capital gain tax of 10% without indexation and 20% with indexation.
    • The sale of listed securities in the short term attract the capital gain tax of 15% and there is no long term capital gains tax provided it has been subject to STT. This makes it clear that the listing of shares on SME is very attractive.
  • All Companies listed on SME Exchange can anytime migrate to the main Board of BSE provided shareholders approval is accorded.