NSE SME IPO Eligibility vs BSE SME IPO Eligibility

Introduction to SME IPO Platforms in India

📌 What Is an SME IPO?

An SME IPO (Small and Medium Enterprise Initial Public Offering) is a public issue where SMEs offer their shares to investors to raise funds for growth. Unlike mainboard IPOs, these offerings are specifically designed for smaller businesses, with relaxed regulatory norms and lower listing fees.

There are two SME platforms in India:

• BSE SME Platform
• NSE Emerge

Each has its own eligibility criteria, although many requirements overlap. Companies must also comply with SEBI’s baseline guidelines before initiating the IPO process.

📄 SEBI’s General Guidelines for SME IPOs

Before listing on NSE Emerge or BSE SME, companies must meet certain regulatory conditions laid out by SEBI (Securities and Exchange Board of India):

• Operational Profits: The company must report a minimum operating profit of ₹1 crore in any 2 out of the last 3 financial years.
• OFS (Offer for Sale): The OFS component cannot exceed 20% of the total issue. Additionally, existing shareholders can't offload more than 50% of their holdings.
• General Corporate Purpose Fund Limit: Funds raised for GCP are capped at 15% of the issue size or ₹10 crore, whichever is lower.
• Loan Repayment Restrictions: IPO proceeds cannot be used to repay loans from promoters or related parties.
• Single Listing: SME IPOs must choose only one platform for listing — either NSE or BSE, not both.

✅NSE SME IPO Eligibility Criteria

NSE Emerge offers a great platform for growing businesses. Here's what a company needs to qualify:

1. Company Registration

• Must be registered under Companies Act 1956/2013.

2. Capital Requirements

• Post-issue paid-up capital should not exceed ₹25 crore.

3. Operating History

• Should have been in operation for at least three years.

4. Financial Performance

• Must have operating profit (EBIDTA) in at least 2 of the last 3 financial years.
• Must show positive net worth in 2 of the 3 previous financial years.

5. Legal & Compliance Checks

• No winding-up petition filed by NCLT or any court.
• Should not have been referred to BIFR (Board for Industrial and Financial Reconstruction).
• Should not be undergoing any proceedings under the Insolvency and Bankruptcy Code.
• Should not be banned from capital markets by SEBI or any other regulatory body.
• Promoters and directors should not be fugitives under the Fugitive Economic Offenders Act, 2018.

6. Document Disclosures

• If any director is involved in legal/criminal matters, it must be fully disclosed.

7. Articles of Association

• Should not include restrictive clauses that affect shareholding or liquidity.

8. Other Key Requirements

• Minimum application size: ₹1,00,000
• Minimum allottees: 50
• Underwriting: Mandatory, with at least 15% underwritten by a SEBI-registered merchant banker.
• Market Maker: Compulsory for SME IPOs on NSE Emerge.

📑Essential Documents for NSE SME IPO

You can find the complete set of listing documents on the NSE Emerge Official Website .

Some essential documents include:

• IPO Application Form
• Listing Agreement
• Fixed Price Issue Format
• Book Building Issue Format
• Checklist for In-Principle and Final Approval

✅BSE SME IPO Eligibility Criteria

The BSE SME platform has slightly different — yet detailed — listing guidelines. Here's a simplified list of requirements:

1. Incorporation

• Must be a company registered under the Companies Act, 1956.

2. Capital & Financial Health

• Post-issue paid-up capital must be below ₹25 crores.
• Net worth of ₹1 crore for the 2 preceding financial years.
• Net tangible assets of at least ₹3 crores in the last fiscal year.
• Must have positive operating profit in 2 of the last 3 financial years.
• The latest year must be profitable.
• Leverage ratio should be less than 3:1, except for finance-related businesses.

3. Track Record

• Minimum 3 years of operations.
• If the company is newly incorporated or converted (from LLP or proprietorship), the previous entity must meet financial thresholds.

4. Website & Demat Requirements

• Must have a functional website.
• 100% of promoter shareholding should be in Demat form.
• Must have signed agreements with NSDL and CDSL.

5. Promoter History

• No change in promoters within the past 12 months before applying.
• Should not be involved in any regulatory non-compliance, delisting, or fraud-related issues.

6. Additional Financial Rules

• No pending defaults in loan repayments.
• If the company has changed its name in the last year, 50% of revenue must come from the new business line.

🔍 Additional Rules for Specific Sectors (BSE SME)

🏦 For Microfinance Companies

• Assets Under Management (AUM): Minimum ₹100 crores.
• Client base: At least 10,000 clients.
• No public deposits allowed.

📈 For Broking Firms

• Net worth & profits: At least ₹5 crores in 2 out of 3 years, or ₹25 crores net worth in 3 out of 5 years.
• Minimum post-issue capital: ₹3 crores.
• Net tangible assets: At least ₹3 crores.

📑 Documents Required for BSE SME IPO

A SEBI-registered merchant banker helps the company compile and submit required documents. These include:

• Listing Application Form
• IPO Opening & Closing Details
• Basis of Allotment Format
• Book Building or Fixed Price Issue Format
• Trading & Listing Approvals

Full checklist is available on the BSE SME IPO Listing Guide .

🆚 NSE vs BSE SME IPO Platform: Key Differences

💼 Benefits of Listing on an SME Exchange

• Easier Access to Capital: Reach a broader investor base.
• Brand Credibility: Improves visibility and reputation.
• Lower Compliance Costs: Compared to mainboard IPOs.
• Investor Liquidity: Enables early investors and VCs to exit.
• Valuation Transparency: Better valuation for the next round of funding.

🚫 Common Mistakes to Avoid During SME IPO

• Unrealistic Valuation: Avoid overpricing your IPO.
• Lack of Transparency: Full disclosures are mandatory.
• Ignoring Underwriting Rules: At least 15% must be underwritten by a merchant banker.
• Weak Financial Documentation: Ensure audited and updated financials.
• Skipping Legal Vetting: Directors under litigation must disclose all details.

✅ Final Checklist Before Applying for SME IPO

• Three years of operating history
• Positive net worth & operating profit
• 100% Demat shareholding for promoters
• Proper agreements with NSDL/CDSL
• Functional website
• No regulatory bans or legal issues
• Documentation of all legal, financial, and promoter details
• Merchant banker onboard for underwriting

🧾 Conclusion: Which Platform Should You Choose?

Choosing between NSE Emerge and BSE SME depends on your company's financial structure, sector, and long-term goals. Both platforms are credible and backed by SEBI regulations. If you're planning to raise funds through an IPO, understanding the eligibility criteria is the first step toward a successful public listing.

If your company meets the requirements, consult a merchant banker or IPO advisor to start the process. Going public can be a transformational move — prepare thoroughly and choose the right platform for your growth story.