The Securities and Exchange Board of India (SEBI) on Monday prescribed norms for listing small and medium enterprises (SMEs) on stock exchanges, including a minimum initial public offering (IPO) application size of Rs. 1 lakh, Chairmna C. B. Bhave said here after the board meeting.
The minimum trading lot would be Rs. 1 lakh. An upper limit of Rs. 25 crore paid-up capital would be prescribed for a company to be listed on the SME platform/exchange and a minimum paid-up capital of Rs. 10 crore would be prescribed for listing on the main boards of the NSE and the BSE.
Further, if the follow on offer/rights issue results in triggering of the limit of Rs. 25 crore, then the company would have to migrate to the main board.
Companies listed on the SME exchanges would be exempted from the eligibility norms applicable for IPOs and FPOs prescribed in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR). The board decided to accord the QIB status to insurance funds set up by armed forces such as Army Group Insurance Fund.
At present the ICDR regulations permit reservation up to 10 per cent of the issue size to employees in public issues. However, there is no ceiling on the number of shares that could be allotted. The board decided to put a ceiling of Rs. 1 lakh on the value of allotment that can be made to an employee under the employee reservation category and to permit reservation up to 5 per cent of the post-issued capital instead of 10 per cent of the issue size.
The board also decided to extend reservation to employees along with the rights issue.
The ICDR Regulations also provide for discount up to 10 per cent of the issue price to retail individual investors and shareholders but not to employees. The board decided to allow discount of not more than 10 per cent to employees also under the reserved category only in public issues for application size up to Rs. 1 lakh.
The board decided to provide an option to all listed entities with subsidiaries to submit their consolidated financial statements as per the International Financial Reporting Standards (IFRS). Taking note that internationally most jurisdictions require disclosure of balance sheet items on an interim basis whereas in India companies disclose only interim financial results, the board decided to mandate half-yearly disclosure of balance sheet items with audited figures or un-audited figures with limited review.
The board decided to make it mandatory to disclose only limited review or audited results within 45 days of the end of the quarter.