A small and medium enterprise (SME) company seeking to list on the bourses without making an initial public offering should be less than 10 years old with revenues not exceeding Rs 100 crore in any of the previous financial years, says SEBI’s new guidelines.
Listing on ITP
The Securities and Exchange Board of India on Thursday issued detailed guidelines for listing of start-ups and SMEs on stock exchanges through the institutional trading platform (ITP).
Besides, the company should have received an investment of at least Rs 50 lakh from any alternative investment funds (AIF), such as venture capital fund, merchant banker, angel investor, specialised international multilateral agency or public financial institution.
The guidelines follow notification of new norms by SEBI earlier this month for permitting listing of start-ups and SMEs through the ITP of exchanges.
According to the guidelines, promoters of SMEs should hold at least 20 per cent equity capital in the company post-listing. Their holding should have a lock-in period of three years from the date of listing, said the SEBI guidelines.
Bar, private route
A company listed on the ITP shall not make an IPO while being listed on the platform. However, they are allowed to raise funds through the rights issue or private placement route.
“In case of a rights issue, there shall be no option for renunciation of rights and the company seeking to get listed on the ITP shall agree to make necessary amendments to its articles of association to this effect,” SEBI added.
According to the norms, an SME would be required to exit the ITP within 18 months if it achieves any of the following milestones -- has been listed on the platform for a period of 10 years; has paid-up capital of more than Rs 25 crore; has revenues of more than Rs 300 crore in the last audited financial statement or market capitalisation of Rs 500 crore.
The market capitalisation will be calculated based on the average closing price of the shares for the previous three months.
The company can also take a voluntary exit if it has the approval from its majority shareholders.
Moreover, a company would be removed from the platform if it fails to file periodic filings with the recognised stock exchange for more than one year and does not comply with corporate governance norms.
The regulator has asked the stock exchanges to “execute a listing agreement with companies seeking listing on ITP in line with the Model Listing Agreement” and implement the amendments.