MumbaiA few moments ago
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In the new rules, out of the last 3 years, it will be necessary to be at least 2 years of operating profit positive.
Small medium size enterprise (SME) has changed the rules required to shift to the mainboard. The National Stock Exchange (NSE) has issued a circular for new revised rules on 24 April today.
In the new rules, SME companies will have to complete the strict eligibility criteria of coming to the main board. According to the new rules, the SME company will have to be listed on the NSE SME platform for at least 3 years.
Along with this, out of the last 3 years, it will be necessary to be at least 2 years of operating profit positive.
SME has to fulfill these conditions to convert to mainboard
- Revenue should be more than ₹ 100 crore from the operation in the last financial year.
- The company’s paid capital (paidup capital) should not be less than ₹ 10 crore.
- The SME company should be listed on NSE’s SME platform for at least 3 years.
- Out of the last 3 years, it is necessary to be at least 2 years of operating profit positive.
- The company’s net worth should not be less than ₹ 75 crore.
- At the time of application, the promoter should have at least 20% shares in the company.
- On the day of listing, the promoters should not be less than 50% of the stocks.
- There should be at least 500 public shareholders by the date of application.
What is SME company?
SME means small and medium enterprise, ie small-grown business businesses whose annual turnover and property are lower than big companies.
These companies usually work locally, such as manufacturing unit, technology startups, or family business.
SM is listed on separate platforms
There are special platforms of BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) to list SME companies in India, such as BSE SME and NSE Emerg.
The listing process on these platforms is simple than the main board. SME companies have to follow low capital (eg ₹ 1-25 million turnover) and easy compliance rules.
Why is SME separated from the main market?
There are three reasons behind this
- Chance for small business: Small companies should not have money and compliance pressure for listing in large markets.
- Reduce risk of investors: Since the risk in sme is high, it helps new investors to invest wisely by placing them on a separate platform.
- Space for growth: Smes get time to improve their performance before going to the main board.
After the new rules, only stable companies will reach the main market
The new rules of NSE are to ensure the financial stability and transparency of companies coming to the main board. The new rules will only be able to reach the main market with strong and durable performance SME companies.
