Introduction: The Bombay Stock Exchange (BSE) has recently revised the eligibility criteria for companies aiming to list on its Small and Medium Enterprises (SME) Platform, as detailed in Notice No. 20231124-54 dated November 24, 2023. This amendment, applicable to Draft Offer Documents filed from January 1, 2024, signifies BSE’s commitment to facilitating SME growth while ensuring that listed entities maintain a robust financial and operational framework. The updated criteria include adjustments in post-issue paid-up capital, net worth, net tangible assets, track record, and other essential requirements, reflecting BSE’s evolving approach to accommodate the dynamic nature of SMEs and their significant role in the economy.
In continuation to Exchange Notice No. 20180711-23, 20190109-10, 20200522-21 and 20200115-29 , BSE has now amended its criteria for listing of companies on SME Platform of BSE. The revised criteria would be applicable for Draft Offer Documents filed on or after January 01, 2024. I have attached herewith a comparison between Old eligibility criteria and Revised Eligibility Criteria
Eligibility Criteria for listing on SME Platform of BSE
|
Sr. No |
Eligibility Criteria | Revised Eligibility Criteria | Existing Eligibility Criteria |
| 1. | Post Issue Paid up Capital |
Not more than Rs. 25 crores | Not more than Rs. 25 crores |
| 2. | Net worth | At least Rs. 1 crore for 2 preceding full financial years.
Note: Cases in which a company is formed pursuant to conversion of registered Proprietorship /partnership/LLP then partnership firm/LLP needs to have Net Worth of Rs. 1 crores for preceding 2 (full) financial years |
Positive Net worth |
| 3. | Net Tangible Asset | Rs 3 crores in last preceding (full) financial year. | Rs 1.5 crores in last preceding (full) financial year |
| 4. | Track Record | The track record of applicant company seeking listing should be at least 3 years. Where the applicant company has taken over a proprietorship concern/ registered partnership firm/ LLP, then the track record together with such proprietorship concern/ registered firm/ LLP should be at least 3 years.
Provided, the applicant company seeking listing should have a track record of operations for at least one full financial year and audited financial results for one full financial year. Or Where the applicant company does not have a track record of 3 years, then the Project for which IPO is being proposed should be appraised and funded by NABARD, SIDBI, Banks (other than co-operative banks), Financial Institutions. Provided, the applicant company seeking listing should have a track record of operations for at least one full financial year and audited financial results for one full financial year. |
The company or the partnership/ proprietorship/ LLP Firm or the firm which have been converted into the company should have combined track record of at least 3 years.
OR In case it has not completed its operation for three years then the company/ partnership/ proprietors hip/LLP should have been funded by Banks or financial institutions or Central or state government or the group company should be listed for at least two years either on the main board or SME board of the Exchange. The company or the firm or the firm which have been converted into the company should have combined positive cash accruals (earnings before depreciation and tax)in any of the year out of last three years and its net worth should be positive. |
| 5. | Earnings before Interest, Depreciation and tax | The company/ proprietorship concern/ registered firm/ LLP should have operating profit (earnings before interest, depreciation and tax) from operations for 2 out of 3 latest financial years preceding the application date.
Provided the company should have operating profit (earnings before interest, depreciation and tax) from operations for one full financial year preceding the application date. For companies seeking listing where the project has been appraised and funded by NABARD, SIDBI, Banks (other than co-operative banks), Financial Institutions, it shall have positive operating profit (earnings before interest, depreciation and tax) from operations in one full preceding financial year. |
· N.A |
| 6. | Leverage Ratio |
Leverage ratio of not more than 3:1. Relaxation may be-granted to finance companies. | · N.A |
| 7. | Disciplinary action |
|
N.A |
| 8. | Default |
|
N.A |
| 9. | Name change |
|
N.A |
Other requirements for (for all Companies)
| Sr. No. |
Revised Eligibility Criteria | Existing Eligibility Criteria |
| 1. | It is mandatory for a company to have a functional website. | It is mandatory for a company to have a functional website |
| 2. | It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories. | It is mandatory for the company to facilitate trading in demat securities and enter into an agreement with both the depositories. |
| 3. | There should not be any change in the promoters of the company in preceding one year from date of filing the application to BSE for listing under SME segment. | There should not be any change in the promoters of the company in preceding one year from of filing the application to BSE for listing under SME segment. |
| 4. | The composition of the board should be in compliance with the requirements of Companies Act, 2013 at the time of in-principle approval. | N.A |
| 5. | The Net worth computation will be as per the definition given in SEBI (ICDR) Regulations | N.A |
| 6. | The Company has not been referred to NCLT under IBC. | N.A |
| 7. | There is no winding up petition against the company, which has been admitted by the court. | N.A |
| 8. | 100% of the Promoter’s shareholding in the Company should be in Dematerialized form | N.A |
Additional Criteria for Broking companies applying for SME IPO:
| Sr.
No |
Revised Eligibility Criteria | Existing Eligibility Criteria |
| 1. | Net worth and profit | Net worth and profit |
| Net worth of minimum Rs. 5 crores with profit before tax of atleast Rs. 5 crores in any 2 years out of 3 financial years. | Net worth of minimum , 5 crores with profit before tax of , 5 crores in any 2 years out of 3 financial years. | |
| Or | Or | |
| having net worth of atleast Rs. 25 crores in any 3 years out of 5 financial years. | having net worth of, 25 crores with profit in any 3 years out of 5 financial years. | |
| Or | Or | |
| The Financial year should be for a period of 12 months. Extraordinary income will not be considered for the purpose of profits. | The Financial year should be for a period of 12 months. Extraordinary income will not be considered for the purpose of profits. (The Net worth will include equity, Preference Shares, reserves and Surplus). | |
| 2. | Net Tangible Assets: | Net Tangible Assets: |
| The Net Tangible assets of at least Rs. 3 Crores as per the latest audited financial results | The Net Tangible assets of at least ,3 Crores as per the latest audited financial results. | |
| 3. | Post issued Paid up capital: | Post issued Paid up capital: |
| Post issue paid up capital of the Broking Member should be minimum Rs. 3 crores. | Post issue paid up capital of the Broking Member should be minimum, 3 crores. | |
Additional Criteria for Micro Finance Companies
| Sr. No. | Revised Eligibility Criteria | Existing Eligibility Criteria |
| 1. | Micro finance companies, in addition to the existing criteria for all SME companies, should have a Asset Under Management of at least Rs. 100 Crores, client base of 10000 & above and it should not have accepted / held public deposit. | Micro finance companies, in addition to the existing criteria for all SME companies, should have a book value of at least ,100 Crores , client base of 10000 & above and it should not have accepted / held public deposit. |
Note :- Cooling off period: Gap of at least 6 months from date of withdrawal/ rejection of issue from SEBI/Exchanges.
Conclusion: The revised eligibility criteria for listing on the SME Platform of the BSE mark a significant move towards enhancing the quality and sustainability of businesses entering the public market. By setting clear, updated financial and operational benchmarks, BSE ensures that only those SMEs with a solid foundation and promising growth trajectory can access capital markets for expansion. This revision not only aligns with the global standards for SME listings but also boosts investor confidence in the SME sector, paving the way for a more vibrant and robust SME ecosystem in India. Companies looking to list on the BSE SME Platform must carefully review and adhere to these revised criteria to capitalize on the opportunities for funding and growth offered by the equity markets.
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