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SME IPO & Process

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SME IPO & Valuation

SME IPOs listing is suitable for Companies with low turnover, less capitalization but the potential for high growth in near future. Upcoming companies, startups, e-commerce, technology companies, infrastructure, developers, agro focused companies are few of them.

Benefits of getting listed in stock market

  • Reduction of debt burden
  • Fund-raising for Capital expenditure, expansion, new projects, M&A etc from Public.
  • Raise funds for activities such as marketing, research where debt is not available.
  • Liquidity to investors/share-holders without affecting the stability of the company
    Listed companies generally find that the market perception of their financial and business strength is enhanced.
  • IPO listing is also a great solution for companies struggling with succession planning and that have difficulty in getting acquired by another company. IPO listing also helps Companies to convert paper currency in currency. It can help to issue ESOPs and retain talent.

 

Tax Benefits of getting listed in the Stock Market

  • The sale of unlisted shares in short-term attract the capital gain tax up to 30% as applicable to the taxpayer and the long-term capital gain tax of 10% without indexation and 20% with indexation.
  • The sale of listed securities in the short term attract the capital gain tax of 15% and there is no long-term capital gains tax provided it has been subject to Share Securities Transaction Tax. This makes it clear that the listing of shares is a very attractive option for SMEs.

 

Process to List the Company on

SME Exchange

  1. Conversion of Company into Public Limited Company, if applicable
  2. Preparation of Documents for conversion and submission to ROC for approval i.e. Alteration of Memorandum, Articles & filing of necessary forms for appointment of aforesaid directors
  3. ROC approval accorded for conversion
  4. Identification & appointment of Registrar & Transfer Agents & Submission of Master Creation forms with NSDL, CDSL for establishing connectivity
  5. Appointment of Managing Director, Whole Time Director, Independent Directors, Company Secretary & deciding about their remuneration, sitting fees etc.
  6. Constitution of committees – Audit, Shareholder Grievance, Remuneration etc. As per SEBI Listing Obligations and Disclosure Requirements Regulations
  7. Preparation of website of the Company & hosting code of conduct on the website
  8. Signing of Tri-Partite Agreement with NSDL & CDSL and receipt of ISIN
  9. Identification & appointment of peer review auditors & getting the financials of last 5 years restated and for last 1 year re-audited from peer review auditors as per SEBI (ICDR) Regulations, 2009
  10. Appointment of Merchant Banker & Market Maker
  11. Preparation of Project Report and Draft Red Herring Prospectus (DRHP) / Prospectus
  12. Filing of Draft Red Herring Prospectus (DRHP) with stock exchange & SEBI (only for hosting)
  13. Visit to registered office of the Company by BSE officials and promoters interview with Listing Advisory Committee
  14. In Principle approval from stock exchange
  15. Filing of Draft Red Herring Prospectus (DRHP) with ROC & getting it cleared from ROC
  16. Filing of Final Prospectus with Stock exchange and SEBI
  17. Opening of the Issue
  18. Closing of the Issue
  19. Allotment of shares
  20. Filing of listing application with Stock exchange
  21. Receipt of listing approval from Stock exchange
  22. Filing of corporate action form with NSDL & CDSL and demat credit of shares
  23. Filing of trading application with Stock exchange
  24. Receipt of trading approval from Stock exchange