The Bombay Stock Exchange (BSE) has implemented new guidelines for small and medium enterprises (SMEs) aspiring to transition from the SME platform to the main board. These guidelines, set to take effect from January 1, 2024, aim to ensure financial stability and regulatory compliance. Here’s a breakdown of the key requirements:
1. Financial Prerequisites
To be eligible for the move, applicants must demonstrate a net worth of at least Rs 15 crore for the preceding two financial years. The paid-up equity capital should exceed Rs 10 crore, and the market capitalization must be a minimum of Rs 25 crore.
2. Listing Duration and Shareholder Base
Applicant firms are required to be listed on the SME platform for a minimum of three years and have a substantial base of 250 public shareholders before transitioning to the main board.
3. Profitability Criteria
Prospective migrants must exhibit a positive operating profit for at least two out of the three preceding financial years. Additionally, a positive profit after tax (PAT) in the immediate financial year of the migration application is mandatory.
4. Legal and Regulatory Compliance
The applicant company should not have faced winding-up petitions admitted by the National Company Law Tribunal (NCLT). No significant regulatory actions, such as trading suspension against the SME and its promoters, should have occurred in the past three years.
5. Regulatory Standing
To ensure a clean record, neither the applicant company, its promoters, nor its subsidiary should be debarred by the Securities and Exchange Board of India (Sebi). This includes no regulatory actions within the last three years.
Impact and Background
The move by the BSE comes as part of efforts to streamline the transition process and maintain the integrity of the main board. Currently, 464 companies have been listed on the BSE SME platform, with 181 successfully migrating to the main board. The dedicated SME platforms by BSE and the National Stock Exchange (NSE), launched in March 2012, continue to play a crucial role in supporting SMEs by facilitating cost-effective equity capital for growth and expansion.
