SEBI To Issue Stricter Listing Norms For SMEs: Report

The markets regulator is looking into increasing the minimum size of such public offers to Rs 300 million to Rs 500 million, and could ask the firms to make more disclosures

Firms with an annual turnover ranging between Rs 50 million to Rs 2.5 billion are considered as SMEs in India.

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The Securities and Exchange Board of India is reportedly planning to enforce stricter rules for public offers of small and medium enterprises (SMEs), media reports said on Tuesday. The development follows complaints raised regarding the misuse of a separate listing platform launched earlier. 

The markets regulator is looking into increasing the minimum size of such public offers to Rs 300 million to Rs 500 million, reported Reuters citing the two sources in the know. The new rules are expected to be enforced later this year once the regulator and exchanges hold discussions with the relevant stakeholders, the report said.

Typically, firms don’t have to follow a minimum issue size, however, those listing on the platform are needed to possess a post-issue capital base of Rs 250 million. The change comes amidst complaints raised regarding a separate listing platform that was launched in 2012 to allow small businesses access the capital markets.

The report quoted one of the sources and said, “A minimum offer size will ensure that serious companies are accessing the capital markets and in turn safeguard the interest of investors.”

Both the regulator and exchanges didn’t give any comment on the matter, the report noted.

Notably, the 2023-24 fiscal year (FY24) saw a surge in public issues by SMEs as 205 firms garnered Rs 60 billion, while 125 firms raised Rs 22 billion in the preceding 2022-23 (FY23) fiscal year via listings, data from PRIME Database revealed. Firms with an annual turnover ranging between Rs 50 million to Rs 2.5 billion are considered as SMEs in India.

In addition to a minimum issue size, the new norms will also require firms to make more disclosures, the report added. “The merchant bankers will be asked to make more upfront disclosures of objects of the issue, financials of the issuer and risk factors,” the report said quoting a source.