What is the SME segment?
To be listed on a stock exchange, companies must meet certain criteria set by SEBI including requirements for operating profit, paid-up capital, etc.
Most SMEs (Small and Medium-sized Enterprises) don't meet these requirements and hence cannot get listed. To enable these smaller enterprises to raise funds through the capital market, the SME exchange was created with lower barriers to entry.
The SME exchange is a segment within NSE (NSE Emerge) and BSE (BSE SME), and not a separate exchange. Stocks are marked under the SM series on NSE and M series on BSE.
More information on NSE Emerge and BSE SME.
Criteria for SME IPO/listing:
| Parameter | Requirement |
|---|---|
| Post-issue paid up capital | Minimum: Rs. 10 crore Maximum: Rs. 25 crore |
| Min allottees in IPO | 50 |
| IPO Underwriting | Mandatory: 100% with 15% Merchant Banker underwriting |
| Track record | Relaxed norms as compared to regular companies |
| Offer document vetting | By stock exchange |
| IPO application size | Minimum Rs. 1 lakh |
| IPO timeframe | 3 - 4 months |
| Reporting requirement | Half-yearly |
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