SEBI eases listing rules for SMEs

MUMBAI: The Securities and Exchange Board of India (SEBI) has relaxed share-

listing norms for small and medium enterprises (SMEs) by allowing them
to disclose their financial results every six months instead of three months, as is the
norm for bigger companies.

Companies listed on the SME exchange will not be required to send a full annual report
to their shareholders and also need not publish their financial results as required in the
main stock exchange.

“Companies listed on the SME exchange may send to their shareholders a statement
containing the salient features of all the documents,” the regualtor said in its circular.

But these companies will have to maintain a public shareholding of at least 25% of the
total number of issued shares at all times. In other words, the promoters’ stake cannot
exceed 75%.

A company listed on the SME exchange, having post-issue capital between Rs 10 crore
and Rs 25 crore can migrate to the main exchange provided it meets the listing
requirements of the stock exchange. For this purpose, the company must first make a
proposal to list the specified securities and obtain the prior approval of its shareholders.

“The issue shall be 100% underwritten and the merchant bankers shall underwrite
15% in their own account. Merchant bankers can also enter into an agreement with
nominated investors to subscribe to the unsubcribed portion of the issue,” the SEBI
circular said.

A stock broker of the main exchange need not seek fresh registration for trading on the
SME platform. Similarly, a sub-broker also need not seek fresh registration, where s/he
is affiliated to stock broker who is eligible to trade on SME platform.

SEBI has also decided to grant approvals to only corporatised and demutualised entities
for operating as an SME exchange,unlike earlier when it had decided to give time to
entities to comply with the regulations.

Besides having a balance sheet net worth of Rs 100 crore, it must also have nationwide
trading terminals and an online screen-based trading system.

The exchange must also have an online surveillance capability which monitors positions,
prices and volumes in real time to keep a tab on market manipulation.

“It shall have adequate arbitration and investor grievances redressal mechanism
operative from all the four regions of the country,” the regulator said.
The risk management system and surveillance system should be the same as it is
currently for the cash market segment, the SEBI circular said.