BSE introduces fresh guidelines for SMEs eying main board transition

The Bombay Stock Exchange (BSE) has introduced new criteria for small and medium enterprises (SMEs) seeking to move from its SME platform to the main board. To qualify, applicants must demonstrate a net worth of at least Rs 15 crore over the previous two financial years.

These guidelines stipulate that the applicant firm should have been listed on the SME platform for a minimum of three years. Moreover, they must boast a shareholder base of 250 individuals before transitioning to the main board.

Furthermore, the SME must exhibit a positive operating profit for at least two out of three financial years and show a positive profit after tax (PAT) in the immediate financial year upon applying for migration to the main board.

"The applicant should have a net worth of at least Rs 15 crore for two preceding full financial years," BSE said in a circular.

Further, the paid-up equity capital of the applicant should be more than Rs 10 crore and the market capitalisation should be at least Rs 25 crore.

Among other parameters, the applicant company should not have received any winding-up petition admitted by the National Company Law Tribunal (NCLT) and no material regulatory action should have been taken against the firm in the past three years like suspension of trading against the SME and its promoters by any stock exchange.

Furthermore, neither the applicant company nor its promoters and subsidiary should be barred by the capital markets regulator, the Securities and Exchange Board of India (SEBI).

In a separate move, the exchange adjusted the qualifications required for listing on the SME platform. According to BSE, these updated guidelines will come into force on January 1, 2024.

To date, 464 companies have been listed on the BSE SME platform, of which 181 have migrated to the main board.

Top bourses—BSE and the National Stock Exchange (NSE)—launched dedicated platforms for SMEs in March 2012 as per the rules and regulations laid down by the SEBI to enable the listing of these firms and help them raise equity capital for growth and expansion in a cost-effective manner.

The platform, which aims to offer an entrepreneur- and investor-friendly environment, lists Indian SMEs in the regulated and organised sector. SMEs are provided assistance in raising equity capital for their growth and expansion, thus helping them transform into full-fledged companies. Eventually, they migrate to the main board of BSE.

(Additional info has been added to this PTI copy for context)