The proposed listing of SMEs and start-ups without the requirement of an IPO was announced by Finance Minister P Chidambaram in the budget earlier this year. SEBI had formed an expert committee to examine the implementation of the proposal. In its next board meeting tomorrow, the regulator will consider the proposal, said a source.
Even though this initiative is expected to help SMEs and start- ups access capital easily, there are certain criteria which these companies need to fulfill before availing the benefits of the proposed listing. The companies should have a clean track record in terms of their borrowings, corporate governance and disclosure norms, along with prior investments by entities like venture capital funds, merchant banks, domestic or global multi-lateral lending agencies and other institutional investors.
SEBI may allow listing of only those companies operating for 10 years or less, having revenues of more than Rs 100 crore or paid up capital over Rs 25 crore. The market regulator is also planning to relax the minimum 25 per cent public shareholding requirement for the SME's and start-ups.
A firm desirous of shifting to the main trading platform or the existing SME exchange will only require an IPO or other listing norms. SEBI may place the promoter's stake under a three year lock-in, as in the main market and the existing SME platform. Also, a company might be asked to compulsorily exit the platform if its worth crosses Rs 25 crore or if it has been listed for over 10 years on the segment.