FAQs
- What is the relaxation provided by SEBI for SME IPO?
- Following ICDR Regulations are not applicable to SME IPO:- 6(1), 6(2), 6(3), 7, 8, 9, 10, 25, 26, 27, 49(1).
- What are the extra conditions which are required to be complied with in comparison with Main Board listing?
- 100% underwriting of the issue.
- Merchant Bankers need to underwrite 15% from their own account.
- Merchant Bankers are required to undertake market making for a period of 3 years.
- Whether Grading of IPO is compulsory for listing on SME Exchange?
- Regulation 26 is not applicable to SME IPO. Hence, IPO Grading is not compulsory for listing on SME Exchange.
- What is the lot size and provision for Odd Lots?
- SEBI has issued a circular vide dated 21st February, 2012 for standardized lot size for SME Exchange.
- The Regulation warrants that the odd lots can be sold only to the market makers and the investor has to give the declaration stating that he is selling all the odd lot shares of the particular scrip. This is to minimize the odd lots in the system.
- What are the capital gain tax benefits by listing on BSE SME?
- The tax benefits are immense. The unlisted shares will attract short term capital gains (STCG) tax upto 30% and long term capital gains tax (LTCG) of 20%. Whereas in listed securities, the STCG tax is 15% and LTCG tax is nil respectively, provided an investor has paid Securities transaction Tax.
- What are the preparations before listing on SME Exchange?
- Preparation required to be made for bringing the IPO proposed to be listed on the BSE SME Exchange is as follows:
- Keeping the Annual Reports on accounts ready.
- Peer Review by Reputed Chartered Accountant firms (since its inception or last 3 years, whichever is shorter)
- Detailed Disclosures about the Past Performance of the company.
- Future Projections of the company (CMA Data) for at least next 3 years.
- Conversion of private limited company to public limited company.
- Full time company secretary (Compliance Officer) to be appointed.
- Infusing 50% independent directors into the Board.
- Due diligence on the applicability of various Regulations.
- Due diligence (Legal) by reputed Legal firms.
- Due Diligence on the various approvals required from Regulatory Bodies.
- Detailed disclosures about the Risk Factors associated with the company.
- Detailed disclosures about the External Environment effecting the company.
- Detailed disclosures about the litigations, its magnitude and ramifications.
- Detailed disclosures about the Business activity.
- Documenting the Material Contracts and Agreements.
- Detailed disclosures about the Promoters & Management.
- Selection of Investment Banker, Registrar and Transfer Agent (RTA), Syndicate Member / Sub- Syndicate Members, electronic media and advertising agency, Escrow Bankers.
- Website is mandatory for listing companies.
- What is the listing fee?
- The SME platform will have one time listing fee of Rs. 50,000/-.
- What is the annual maintenance cost?
- Annual Fees will be minimum Rs. 25,000 or 0.01% of full Market Capitalization whichever is higher. The basis of calculation of Market Capitalization will be average of price as on March 31 or last day of trading in the financial year.
- What are the provisions for publishing unaudited / audited financials?
- Submission of Half Yearly Results instead of Quarterly Results.
- No requirement of Publishing of Financial Results and notices of Board Meetings to adopt audited / unaudited results.
- Whether suspended companies are allowed to list on SME Exchange?
- The suspended companies’ scrips are not permitted for listing on BSE SME Exchange unless the suspension is revoked and the company is allowed to trade on the Main Board of BSE.
- What are the major features of SME Exchange?
- All the existing SEBI registered members of the Main Board exchanges are allowed to participate on the SME exchanges.
- Settlement mechanism of T+2days as applicable to the main Board.
- Quotes by market makers & Trading system of SME Exchange is based on BSE Online Trading System (BOLT).