Friday, November 15, 2013

Listing of specified securities of small and medium enterprises on the Institutional Trading Platform in a SME Exchange without making an initial public offer.

The Securities & Exchange Board of India (SEBI) has decided to permit listing without an Initial
Public Offer and trading of specified securities of small and medium enterprises(SMEs) including start-up companies on Institutional Trading Platform (ITP) in SME Exchanges. The following are the features of the amendments: -

  1. The Institutional Trading Platform (ITP) shall be available to informed investors who are either individuals or institutions and the minimum trading lot shall be ten lakh rupees on this platform. Companies listed on ITP shall not make IPO of securities.
  2. Eligibility of Listing: -

  • Company, Directors and Promoter group should not appear in the wilful defaulters list of RBI and CIBIL
  • No winding up petition against the company
  • The company has not been referred to BIFR up to 5 years from the date of application
  • At least one year audited financials.
  • Company has not completed 10 years of its operations with revenues not exceeding Rs 100 crores in any of the year.
  • Paid up capital has not exceeded Rs 25 crores.
  • Certain minimum investment requirements as mandated by SEBI.
Process of Listing: -
  • Application to Recognized Stock Exchange.
  • Approval by Recognized Stock Exchange
Capital Raising:

  • No IPO during the time period in which company is listed on ITP
  • Capital raised through Private Placement or Rights Issue, within no option of renunciation.
  • Letter of Offer to shareholders
Minimum Shareholding for promoters kept at 20% with a lock in period of 3 years
Exit from ITP: -
  • Voluntary exit by passing a special Resolution through postal ballot with majority support of non-promoters, 90% assenting shareholders & SME exchange approval.
  • Automatic exit within 18 months on occurrence of any of the conditions of eligibility as laid down in clause 2 or has created a market cap of Rs 500 crores.
  • Permanent removal on occurrence of any of the following: -

Failure to file periodical filings for more than one year.
Failure to comply with corporate governance norms for more than one year.
Non compliance of conditions of listing as mandated by Recognized Stock Exchange.

The SMEs are liable to give a Board Resolution regarding approval of draft & final memorandum
and its disclosures.


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