An Overview on SME ISSUE
- 1. Applicability as per Chapter X-B of SEBI (ICDR) 2009 POST ISSUE CAPITAL EXCEED Rs. 10 CRORE BUT DOESN’T EXCEED Rs. 25 CRORE POST ISSUE CAPITAL DOESN’T EXCEED Rs. 10 CRORE ISSUE OF SPECIFIED SEQURITIES BY SMALL AND MEDIUM ENTERPRISE ELIGIBILITY CRITERIA ON BSE SME ** Company must have at least distributable profits in terms of Section 123 of the Companies Act 2013 for at least two years out of immediately preceding three financial years (each financial year has to be a period of at least 12 months). Net-Worth Net-Worth At least Rs. 3 Crore At Least 5 Crore if profatibility criteria** dosen`t satisfy Tengible Assets Net Tangible Assets At-Least Rs. 3 Crore as per latest audited Financial Results Paid-up Capital POST ISSUE PAID UP CAPITAL AT-LEAST RS. 3 CRORE
- 2. SOME MAJOR STEPS IN MAKING SME IPO: PRE IPO CAPITAL RESTRUCTURING AND DUE DILIGENCE PREPARATION OF OFFER DOCUMENT SITE VISIT AND INTERVIEW OF PROMOTERS OFFER MANAGEMENT LISTING COMPLIANCE
- 3. ELIGIBILITY CRITERIA ON NSE EMERGE NON-APPLICABILITY OF CERTAIN REGULATION OF SEBI (ICDR) REGULATIONS 2009: Regulation 6 & 9 – No need to file Draft offer document with the Board i.e. SEBI as well as stock exchange and Public. Regulation 8 - Exemption from filling certain documents with the Board which any company other than SME shall file these documents are as follows: i. Agreement between issuer and merchant banker ii. Due Diligence certificate filed by Merchant banker with Draft offer document. iii. Compliance certificate. Post-Issue paid up Capital: • Shall not be more then Rs. 25 Crore. Track record: •Good track record of profit for at-least 3 Years •Company Shall have positive cash flow at least 2 yaers before the date of making application and Net worth shall be positive. Other requirements: •No material regulatory or disciplinary action by a stock exchange or regulatory authority in the past three years against the applicant company.
- 4. Regulation 10 - Companies listed on SME exchange are not allowed issuing securities through Fast track issue Regulation 49(1) of SEBI (ICDR) 2009 is not applicable on company i.e. for other then SME companies there is requirement of minimum application value which should be with-in range between 10 thousand to 15 thousand. FILING OF OFFER DOCUMENT AND DUE DILIGENCE CERTIFICATE WITH THE BOARD: Offer document and prospectus shall be simultaneously filed with the Board and SME exchange. Due diligence certificate shall be filed by merchant banker in the format as prescribed in Form A of Schedule VI and offer document in Form F of schedule VI. UNDERWRITING: Issue of SME shall be 100% underwritten. Merchant banker shall underwrite 15% of the issue size on their own account. If underwriter fails to fulfill their obligation then merchant banker shall fulfill underwriting obligation. All the underwriting made by the merchant banker shall be disclosed in the offer document. One day before opening of the issue, underwriter shall give an undertaking to the SEBI that the issue is 100% underwritten along with the name of underwriter. SOME IMPORTANT POINTS:
- 5. PROVISION REGARDING MIGRATION 1. Migration from main Board to SEM platform. An issuer whose post issue face value of equity shares are less the Rs. 25 Crore may migrate themselves from main board to SME platform. Conditions to be complied for Migration: Special Resolution to be passed in meeting through postal ballot. Promoters can’t participate in voting. Special resolution shall be deemed to be passed if votes cast in favour of resolution is more then twice against resolution (excluding promoters’ votes). 2. MIGRATION FROM SME TO MAIN BOARD. An issuer whose post issue face value capital is more the Rs. 10 Crore may migrate themselves to main Board. MINIMUM APPLICATION VALUE • NOT LESS THAN RS. 1 LAKHS PER APPLICATION MINIMUM NUMBER OF PROPOSED ALLOTTES • AT LEAST 50 ALLOTTEES LISTING OF SECURITIES •SECURITIES SHALL BE LISTED ON SME EXCHANGE •IF ALREADY LISTED ELSE THEN SHALL BE MIGRATED TO SME EXCHANGE
- 6. An issuer whose post issue face value of capital is likely to increase beyond more the Rs. 25 Crore then issuer shall migrate his company from SME to Main Board. Conditions to be comply before migration: Conditions are mutatis-mutandis as applicable to migration from main board to SME. Issuer shall obtain In-principle approval from main board for migration of securities from SME to Main Board. MARKET-MAKING: Market making is compulsory in SME issue. A registered stock broker can act as market maker. Market making period shall be minimum period of 3 Years. Market maker cannot purchases shares of promoters or person belonging to promoters. Provision regarding listing fees (On BSE SME): The Annual Listing Fees: Rs 25,000/- Which ever is Or Higher 0.01% of full market capitalization The basis of calculation of Market Capitalization will be the closing price as on 31st March or the last day of trading in the financial year. AND One time Processing fees of Rs. 50,000 (Plus Service tax as applicable) - At the time of initial listing
- 7. Provision regarding listing fees (On NSE Emerge): Particulars Amount ( ) Initial Listing Fees (Processing Fees) 25,000 Annual Listing Fees (based on paid up capital) Upto 5 Crore 10,000 Above 5 Crore and upto 10 Crores 15,000 Above 10 Crore and upto 20 Crores 25,000 Above 20 Crore and upto 25 Crores 45,000 An overview on some previous year SME issues: X x x x x c d * Source- Prime Data Base (Web Address- http://www.primedatabase.com/sme_ipo_demo.asp) Made by: Pankaj Passi (CS Trainee) Corporate CapitalVentures Pvt. Ltd. YEAR Number OF SME ISSUES Amount (Rs. Cr.) 2011-2012 1 7.25 2012-2013 24 207.75 2013-2014 37 285.68 2014-2015 38 249.74 2015-2016 50 310.60 2016-2016 (as on 31/05/2016) 5 51.91 Total 155 1,112.93