SME IPO Listing in India - Now Raise Capital on the NSE/BSE

A Draft Red Herring Prospectus must include the following:

• Overview of the business and plan
• Market industry analysis and consumer segments
• Risk analysis and assessments
• Management discussion and analysis (MD&A)
• Details on the promoter and its group
• Transactions of the related parties/companies
• Information on outstanding litigations and lawsuits
• The intended use of the IPO proceeds
• Dividend policy
• Capital structure of the company

An IPO is a private company’s first-time issuing shares to the public after converting from private to public, whereas an FPO facilitates the issuance of new shares and securities by an already listed company.

• Balance sheets, profit & loss accounts, cash-flow statements.
• A report by a certified CA, restating the financial information. 
• Analysis of financial results by the manager.
• Complete records of the company in the last three years.
• List of all tangible assets of the entity.
• Proof of profitability in the last 2 out of 3 years.
• A paid-up capital statement. 

The National Stock Exchange has a separate designated platform for new companies and mid-size entities seeking funds for business expansion and liquidity. The platform helps small businesses connect with angel investors and venture capitalists.

Yes, you will have to enrol in the Red Herring Prospectus and allotment with the Registrar. Some key post-compliance filings include:

• Form PAS-3-return of allotment within 30 days of the resolution passing. 
• Form PAS-5- record of allotees within 15 days of the said allotment. 
• Board resolution via the MGT-14, DIR disclosures, and AOC-4 filings. 

The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the main regulatory authority that oversees the entire listing process and provides in-principle approval and observation letter. However, the SEBI is the main authority that lists the eligibility criteria and disclosure norms for IPO seeking companies.
Another important authority is the Registrar of Companies, which ensures your prospectus is registered with them, ensures compliance with the Companies Act of 2013, and handles your annual corporate filings.

There’s no such government charge by the SEBI either at the central or state level. However, you will have to pay:

• INR 1 to 3 lakhs for listing.
• 25,000-45,000 as annual maintenance charges 
• Depending on the exchange and issue size. 

The public must hold at least 25% of the total initial public offering of the small and medium enterprises, applicable to both NSE and BSE.

Even though it's not explicitly stated in any of the regulations, you should have a positive net worth of anything between INR 1 crore and 1.5 crore if you’re seeking a small and medium enterprises IPO on the National or Bombay Stock Exchange.

There are real consequences and fines if you fail to comply with the stock exchanges and SEBI after the listing of the Initial public offer and subsequent trading.
Penalties against the delay or failure in filing the following (in INR):

• Quarterly or annual results: 5,000 per day. The default can go up to 5 lakhs. 
• Shareholding pattern and reconciliation of the share capital audit: 2,000 per day.
• Annual general meeting reporting: 1,000 to 5,000 per day.

The annual listing maintenance cost is around INR 25,000 or 0.01% of the full market capitalization (whichever is higher) for BSE and anything between 10,000 and 45,000 for NSE Emerge.

The list of financial requirements for the Small and Medium IPO includes: 1) continuous company operations for at least three years; 2) a minimum of INR 3 crore as net tangible assets; 3) the net worth must be positive in all three financial years; 4) the entity should be in profit for at least 2 out of 3 years; 5) a paid-up capital between INR 1 crore to 25 crores; 6) a minimum IPO issue size of INR 10 crore; 7) the size of an application must be INR 1 lakh; and 8) company’s promoter should contribute at least 20% of the post-issue capital (with 3 year lock-in period.

Small and medium enterprises’ initial public offering is an entry-level listing process that helps SMEs and startups get a headstart to public shareholding with fewer compliance rules, less financial requirements, and smaller issue sizes compared to a mainboard listing.

Although there’s no profit limit set by the Securities and Exchange Board of India, your company must have been in profit in the last two out of three years before you file for the public offering listing.

The Regulation 26 of the SEBI (ICDR) regulation of 2018 is not applicable to SMEs seeking an IPO, meaning there’s no requirement for an independent assessment of the company’s fundamentals like a mainboard application.

The entire procedure will take around 4 to 6 months. It depends on how many times you modify your DRHP, the approval timeline, and compliance.