LISTING OF SME ON BSE

CRITERIA FOR LISTING

1. Incorporation

The Company shall be incorporated under the Companies Act, 1956.

2. Financials
Post Issue Paid up Capital
The post-issue paid up capital of the company shall be at least Rs. 1 crore.
Networth
Net worth (excluding revaluation reserves) of at least Rs.1 crore as per the latest audited
financial results.
Net Tangible Assets
At least Rs.1 crore as per the latest audited financial results.
Track Record
Distributable profits in terms of Section 205 of the Companies Act 1956 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). Extraordinary income will not be considered for the purpose of
calculating distributable profits.
Or
The net worth shall be at least Rs.3 crores.
3. Capital

The post issue face value capital should not exceed Rs. Twenty-five crores.

4. Trading lot size
The minimum application and trading lot size shall not be less than Rs. 1,00,000/-
The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be less than
Rs 1,00,000/-
The investors holding with less than Rs 1,00,000/- shall be allowed to offer their holding to
the Market Maker in one lot.
However in functionality the market lot will be subject to revival after a stipulated time.
5. Participants

The existing Members of the Exchange shall be eligible to participate in SME Platform.

6. Underwriting

The issues shall be 100% underwritten and Merchant Bankers shall underwrite 15% in their
own account.

7. Other Requirements
It is mandatory for a company to have a website.
It is mandatory for the company to facilitate trading in demat securities and enter into an
agreement with both the depositories.
There should have been no change in the promoters of the Company in the one year
preceding the date of filing application to BSE for listing on SME segment.
For listing on BSE SME platform promoters will mandatorily be required to attend an
interview with the Listing Advisory Committee.
8. Disclosures

A certificate from the applicant company / promoting companies stating the following

a) " The Company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR)."

Note: Cases where company is out of BIFR is allowed.

b) There is no winding up petition against the company, which has been admitted by the
court or a liquidator has not been appointed.



PROCEDURE
Planning

The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.

Preparation

The Merchant Banker prepares the documentation for filing after:
conducting due diligence regarding the Company i.e checking the documentation including
all the financial documents, material contracts, Government Approvals, Promoter details etc.
and planning the IPO structure, share issuances, and financial requirements
Process

Application procedure:
Submission of DRHP/Draft Prospectus - These documents are prepared by the Merchant
Banker and filed with the Exchange as well as with SEBI as per requirements.
Verification & Site Visit - BSE verifies the documents and processes the same. A visit to the
company's site shall be undertaken by the Exchange official .The Promoters are called for an
interview with the Listing Advisory Committee.
Approval - BSE issues an In Principle approval on the recommendation of the Committee,
provided all the requirements are compiled by the Issuer Company.
Filing of RHP/Prospectus - Merchant Banker files these documents with the ROC indicating
the opening and closing date of the issue.
Once approval is received from the ROC, they intimate the Exchange regarding the opening
dates of the issue along with the required documents.
Public Offering

The Initial Public Offer opens and closes as per schedule. After the closure of IPO, the
Company submits the documents as per the checklist to the Exchange for finalization of the
basis of allotment.

Post Listing

BSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.

A flow chart depicting the various steps for listing a company on BSE is as follows:


Conversion of company into public limited company, if applicable
Preparation of documents for conversion and submission to ROC
for approval i.e., Alteration of Memorandum, Articles & filing of
necessary forms for appointment of aforesaid directors.
ROC approval accorded for conversion
Identification & appointment of Registrar & Transfer Agents &
submission of Master Creation forms with NSDL, CDSL for
establishing connectivity
Appointment of Managing Director, Whole-time Director,
Independent Directors, Company Secretary & deciding about their
remuneration, sitting fees etc.
Constitution of committees Audit, Shareholder, Grievance,
Remuneration etc. as per SME listing agreement
Preparation of website of the company and hosting code of conduct
on the website




Signing of Tri-Partite Agreement with NSDL & CDSL & receipt of ISIN
Identification & appointment of peer review auditors & getting the
financials of last 5 years restated & for last 1 year re-audited from
peer review auditors as per SEBI regulations, 2009
Appointment of Merchant Banker & Market Maker
Preparation of Project Report & Red Herring Prospectus(RHP)
Filing of Red Herring Prospectus with Stock Exchange & SEBI(only for
hosting) & along with application for in-principle approval with Stock
Exchange
Clearance from Stock Exchange
Filing of Red Herring Prospectus with ROC & getting it cleared from
ROC
Filing of Final Prospectus with Stock Exchange & SEBI



Opening of the Issue
Closnig of the Issue
Allotment of shares
Filing of listing application with Stock Exchange
Receipt of listing approval from Stock Exchange
Filing of Corporate Action Form with NSDL & CDSL and demat credit of
shares
Filing of trading application with Stock Exchange
Receipt of trading approval from Stock Exchange
CHECKLIST OF DOCUMENTS
Along with the application for using the name of the Exchange in the offer document, the
following documents/information shall to be filed by the Company with the Exchange:

1. 10 copies of the draft offer document.
2. Soft copy of the Prospectus for uploading on website
3. Copy of resolution passed by the Board of Directors for issue of securities
4. Copy of the shareholders resolution under 81(1A) of Companies Act, 1956
5. Certificate from the Managing Director / Company Secretary or PCS / Statutory or
Independent Auditors stating the following:
a) The Company has not been referred to the Board for Industrial and Financial
Reconstruction (BIFR).
b) There is no winding up petition against the company that has been accepted by a court.
c) There has been no change in the promoter/s of the Company in the preceding one year
from date of filing application to BSE for listing on SME segment.
6. Copy of all show cause notice(s)/order(s) issued by any regulatory authority (e.g. SEBI,
ROC, RBI, CLB, Stock Exchange etc.) & correspondence there to.
7. PAN & TAN of the Company.
8. DIN & PAN of Promoters and Directors
9. Printed Balance Sheets, Profit & Loss Accounts and Cash Flow Statements for the preceding 5
years (or for such applicable periods)
10. Copies of major orders/contracts/ received/ executed/ in-hand should be kept ready and
be available for inspection. A statement of material contracts duly certified by a practicing
Chartered Accountant/ practicing Company Secretary should be submitted. The Company
should also state the place, time and date where these documents can be inspected
11. A statement containing particulars of the dates of, and parties to all the material contracts,
agreements (including agreement for technical advice and collaboration), concessions and
similar other documents (except those entered into in the ordinary course of business
carried on or intended to be carried on by the company) together with a brief description of
the terms, subject matter and general nature of the documents.
12. Details if the present or any previous application of the Company/Group Company for listing
of any securities has been rejected earlier by SEBI or by any stock exchange and
reasons thereof.
13. Name of the exchange which is proposed to be designated Exchange for the issue, if
decided.
14. Copies of agreements and memoranda of understanding between the Company and its
promoters/ directors.
15. Articles & Memorandum of Association of the Company.
16. A certificate from the statutory auditor/practicing chartered accountant certifying
compliance of conditions of Corporate Governance as stipulated in clause 52 of the listing
agreement and circular no. SEBI/CFD/DIL/CG/1/2004/12/10 dated October 29, 2004 issued
by the Securities and Exchange Board of India (SEBI). The company should also give the
composition of various committees as required under the said clause.
17. Association, if any, of the directors/ promoters of the Company with any public or rights
issue made during the preceding 10 years.
18. One Time Listing Fees of Rs. 50,000/ plus applicable Service Tax. (Details of all applicable
fees for SME Listing is attached)
19. Date of opening of public issue to be intimated as soon as it is finalized.
20. Due Diligence Certificate as submitted to SEBI addressed and submitted to BSE.
21. SEBI scores registration

Also, a questionnaire intended to elicit information from SMEs who intend to raise capital on
BSE SME Exchange needs to be filled out.

The link to the questionnaire: Information Questionnaire



Further, a Register your Interest form maybe filled out to register either as a Listed Company
or as a Market Maker

Link: Register Your Interest

BENEFITS OF LISTING

Easy access to Capital
BSE SME provides an avenue to raise capital through equity infusion for growth oriented
SMEs.
Enhanced Visibility and Prestige
The SMEs benefit by greater credibility and enhanced financial status leading to demand in
the companys shares and higher valuation of the company.
Encourages Growth of SMEs
Equity financing provides growth opportunities like expansion, mergers and acquisitions thus
being a cost effective and tax efficient mode.
Ensures Tax Benefits
In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term
Capital Gains Tax.
Enables Liquidity for Shareholders
Equity financing enables liquidity for shareholders, provides growth opportunities like
expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode.
Equity financing through Venture Capital
Provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing
their lock in period.
Efficient Risk Distribution
Capital Markets ensure that the capital flows to its best uses and that riskier activities with
higher payoffs are funded.
Employee Incentives
Employee Stock Options ensures stronger employee commitment, participation and
recruitment incentive.



Captain Polyplast Limited Example

In December 2013, Gujarat based Captain Polyplast Limited the manufacturer, exporter and
trader of supreme quality HDPE pipes and irrigation equipment, listed itself on the SME
platform of BSE Limited. The company has come out with its public issue of 19.80 lakh equity
shares of a face value of Rs.10 each. Rs.5.94 crore was raised through the issue at a cash price
of Rs.30 per equity share.

The capital structure after being listed on BSE is as follows:








The company intends to utilize the proceeds of the issue to meet the following objectives:

To fund the expansion plans
General corporate purpose
To meet the issue expenses

In addition, the company expects to receive benefits from listing of equity shares on the SME
platform of BSE. The listing will enhance the corporate image and the brand name of the
company.


The total estimated fund requirement of the company is as below:



Following are the means of finance to finance the fund requirements:



The details of use of issue proceeds are:





The intended use of the net proceeds of Rs.564 Lakhs is as follows:




The management, in accordance with the policies established by the Board of Directors, will
have flexibility in deploying the proceeds received from the Issue. Pending utilization of the
proceeds of the Issue for the purposes described above, the funds maybe invested in high
quality interest bearing liquid instruments including money market mutual funds, deposits with
banks or temporarily deploy the funds in working capital loan accounts and other investment
grade interest bearing securities as may be approved by the Board of Directors. Such
investments would be in accordance with the investment policies approved by the Board of
Directors from time to time and at the prevailing commercial rates at the time of investment.

The net worth of the company as on 31
ST
March, 2013 was Rs.1208.34 lakhs. Since, the
company has nil intangible assets, the net worth is the tangible net worth.