Mumbai, Oct 10 (KNN) The market regulator, Securities and Exchange Board of India (SEBI) has allowed listing of small and medium enterprises (SMEs) on the stock exchanges without making any initial public offering (IPO).

The SMEs can now list themselves on the SME market without raising any money from the public, a move which will help both investors and the small companies.
SEBI has made amendments of rules to permit listing of start-ups and SMEs in Institutional Trading platform (ITP) without having to make an IPO.

The companies would be listed on a platform which is open only to institutional investors and which would have a minimum trading lot of Rs 10 lakh, according to a regulatory notification.


The move will provide easier exit options for entities such as Angel Investors, Venture Capital Funds and Private Equities.

SEBI also said that the company would not make an IPO while its specified securities are listed on ITP but can raise capital through private placement or rights issue without an option for renunciation of rights.

Among other conditions, the company, group companies or subsidiaries should not have been referred to the Board for Industrial and Financial Reconstruction (BIFR) within a period of five years prior to the date of application for listing.

Besides, no regulatory action has been taken against the company seeking to list on ITP , its promoter or director, by SEBI, RBI, Insurance Regulatory and Development Authority (IRDA)or Corporate Affairs Ministry within five years prior to the date of application for listing.


Other criteria include not completing more than 10 years after incorporation and revenues, which have not exceeded Rs 100 crore.

The companies that list on the platform would also require to have received funding or investment from at least one from a list of eligible entities, which include angel investors, alternative investment funds, scheduled banks or specialised international multilateral agencies.

The exit from such an institutional trading platform will be subject to a nod from a majority of non-promoter shareholders and the stock exchange where it is listed.

The exit would also happen if the company has been listed for 10 years or fulfils criteria such as revenues of more than Rs 300 crore or market capitalisation, which is greater than Rs 500 crore.

The exchange can de-list the company if it fails to file periodic filings or comply with corporate governance norms for more than a year.

The promoters and non-independent directors of a company, which is de-listed for non-compliance, will not be allowed to list another company on the platform for five years.

Companies cannot come out with an IPO while listed on the platform but can raise capital through private placement or rights issue. (KNN/SD)