BSE launches new platform for listing start-ups, SMEs

In his annual Budget speech, Finance Minister had announced that start-ups and SMEs can get listed on the bourses without bringing IPO

Leading stock exchange BSE today launched Institutional Trading Platform to enable the listing of start-ups and SMEs without their having to sell shares through Initial Public Offer (IPO).

 

In his annual Budget speech earlier this year, Finance Minister P Chidambaram had announced that start-ups and SMEs (Small and Medium Enterprises) can get listed on the bourses without bringing IPO.

 

Consequently, capital markets regulator Sebi decided to permit the listing without IPO and trading of specified securities of SMEs, including start-up companies, on Institutional Trading platform (ITP) on the exchanges.

 

Sebi notified new provisions and issued a detailed circular to facilitate such listings last month.

 

"In view of this, we announce the launch of the Institutional Trading Platform today, that is on November 28, 2013, for accepting the Information Memorandum from the companies for listing on Institutional Trading Platform," BSE said in a circular.

 

ITP will help SMEs and start-ups raise capital from the securities market during their early stages of growth, as lack of exit opportunities for investors in case of unlisted companies come as a major hindrance for small companies to get capital.

 

A company would be eligible for such a listing if it has not completed 10 years after incorporation, and its revenues have not exceeded Rs 100 crore in any of the financial years.

 

In addition, the company should have got an investment of at least Rs 50 lakh by an alternative investment fund, or a venture capital fund, or by a merchant banker, or an angel investor, or a specialised international multilateral agency, or a public financial institution, among other such investors.

 

While there would be no need to come out with an IPO, such companies may raise funds through private placement or rights issue.

 

Besides, promoters of these SMEs will need to hold at least 20 per cent of the post-listing capital of the company and it should be locked-in for three years from the date of listing.

 

However, a company will be removed from the platform if it fails to make periodic filings with the recognised stock exchange for more than one year and does not comply with corporate governance norms.