BSE-SME eases eligibility criteria for listing

Suresh P Iyengar Mumbai | Updated on May 26, 2020

Net tangible asset requirement halved to ₹1.5 crore; positive cash accruals in just one of past three years adequate

Amid the Covid crisis, the BSE-SME exchange has halved to ₹1.5 crore, the net tangible asset requirement for small and medium enterprises planning to list on the platform.

Of the mandatory three years of operations, a company will now be eligible to list if it has combined positive cash accruals (earnings before depreciation and tax) in any one year. Earlier, it had to show positive cash accruals for all three years.

Makarand Joshi, Partner, MMJC and Associates LLP, a corporate compliance firm, said the disruption caused by Covid in terms of cash flow to the economy has been unprecedented and has led to distress among the SME segment. At a time when commercial banks are reluctant to lend for fear of NPAs, the relaxation in eligibility norms for SME listing would enable leveraged SMEs to explore the capital market space and survive the downturn, he added.

The Indian SME sector has been starved of debt and equity funding. While it accounts for 48 per cent of the country’s exports, it has access to just 18-20 per cent of bank credit.

Compliance is key

While the new norms have eased listing norms, SMEs have to learn the ropes of compliance to graduate to the next level in the capital market space, said Joshi.

Earlier, both BSE-SME and NSE-Emerge had cut the annual listing fee by 25 per to help more SMEs list. The revised lower listing fee structure will be applicable to both companies already listed and those which are in the process of listing.

The rebate in fee comes close on the heels of Finance Minister Nirmala Sitharaman announcing several measures to rescue the ailing SME sector.

As part of a ₹20-lakh crore financial package, the Centre plans to infuse ₹50,000 crore equity into MSMEs through a fund-of-funds to be set up separately.

BSE SME has 322 companies listed on its platform; of this, 79 have migrated to the main board. The 322 have altogether raised ₹3,279 crore from the market and command a market capitalisation of ₹15,865 crore.

Published on May 26, 2020

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