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There are two ways of raising capital. Either borrowing from banks or funds from promoters. Banking funds are the most common type of borrowings. But for a startup company, to bear the cost of borrowed funds is very risky. Despite the benefits associated with the public listing, the SMEs were not able to access the capital markets through Stock Exchanges due to several factors such as stringent regulatory compliances, disclosure and financial requirements, etc. The BSE SME Exchange has been set up by the Bombay Stock Exchange (BSE) to provide Small and Medium-Sized Enterprises (SMEs), a platform for raising equity capital for their growth and expansion, in March 2012.
A dedicated stock exchange for SMEs would allow them accessing the capital markets easily, quickly and at lesser costs. SME (Small and Medium-size Enterprises) exchange is a platform made by the BSE (Bombay Stock Exchange) in 2012 by the initiative of the Indian Government along with SEBI. It is a phenomenal framework for entrepreneurs. It is a popular concept worldwide.
Under the SME platform for the listing of specified securities, the entity has to comply with the following provisions:
In order to fulfill SEBI ICDR Regulations, consequent amendments have been made to various other regulations such as:
Read our article:SME Exchanges and Benefits of SME Listing
Step 1: Appointment of Merchant Banker
A Merchant Banker must be appointed by the company for the listing on the BSE SME exchange.
Step 2: Due diligence and Documentation
The Merchant Banker should conduct due diligence regarding the Company i.e. checking the documentation including all the financial documents, material contracts/agreements, Government Approvals, Promoter details, etc. and preparing the documentation for the IPO. Planning and documentation by the Merchant Banker must include
Step 3: Application to BSE SME Exchange
Merchant Banker has to prepare documents which shall be filed with the Exchange as well as with SEBI as per requirements.
BSE verifies the documents and processes the same. A visit to the company’s site shall be undertaken by the Exchange official. The interview is to be conducted by the Promoters and Listing Advisory Committee.
All the requirements are compiled by the Issuer Company in respect of the BSE listing process issues an In-Principle approval on the recommendation of the Committee.
Merchant Banker has to file these documents with the ROC indicating the opening and closing date of the issue. Once approval is received from the ROC, the opening dates of the issue along with the required documents have to be intimated to the Exchange by him.
Step 4: Initial Public Offer (IPO)
The IPO opens and closes as per schedule. After the closure of the IPO, the Company submits the documents as per the checklist to the Exchange for finalization of the basis of allotment.
Step 5: Post Listing
BSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.
If you want to avail of any service in respect of the SME Listing, Interslice will provide you the tailor-made services and end to end processing regarding the same. For more information, visit our website www.enterslice.com or email us at email@example.com.
Read our article:BSE Listing Process and Requirement