For SMEs, a pivotal route to secure capital and foster business growth lies in pursuing an Initial Public Offering (IPO) and getting listed on the stock exchange. This article explains the path for SMEs to achieve exchange listing through SME IPO eligibility criteria.

 

 

Understanding the SME IPO

An SME IPO represents a public offering of shares by SMEs, to procure capital from the public. These shares are listed on a stock exchange, enabling investors to trade them on the open market.

Eligibility Standards for SME IPO

To qualify for an SME IPO, an SME must meet the subsequent eligibility norms:

• Incorporation Under the Companies Act, 1956: The SME should be incorporated under the provisions of the Companies Act, 1956.
• Face Value: The SME's face value, post-issue paid-up capital, should not exceed ₹25 Crore.
• Net Tangible Assets: The SME's net tangible assets must have a value of at least ₹1.5 Crore.
• Track Record: In the case of SMEs established through the conversion of partnership, proprietorship, or LLP firms, they must demonstrate a track record spanning a minimum of three years.
• Presence: The SME is expected to maintain a website.

 

Advantages of Opting for an SME IPO

• Embarking on the journey of listing on the stock exchange via an SME IPO presents SMEs with compelling advantages:
• Capital Accessibility: An SME IPO opens the doors to capital from a spectrum of investors, enabling SMEs to raise funds conducive to their expansion and growth endeavours.
• Enhanced Visibility: Stock exchange listing elevates an SME's visibility, simplifying the process of attracting customers, forging partnerships, and securing investors.
• Elevated Credibility: An SME IPO augments the credibility of an SME, bolstering its appeal to customers, partners, and investors.
• Liquidity: Listing on a stock exchange offers a vital component of liquidity to shareholders, simplifying the buying and selling of shares.

 

An SME IPO represents an avenue for SMEs to secure capital and advance their business aspirations. By adhering to the eligibility criteria, SMEs can navigate the path towards stock exchange listing with ease, reaping the benefits of capital accessibility, visibility, credibility, and liquidity.