Small and Medium Enterprises (SMEs) are the backbone of a nation’s economy. Like any other major economy, India too enjoys its fair share of SMEs which constitute bulk of the industrial base, also contributing significantly to the exports and GDP. But even then they face difficulty in finding investors and getting listed on main board.
An SME Exchange is a stock exchange dedicated for trading the shares / securities of SMEs who otherwise find it difficult to get listed on the Main Board. The concept originated from the difficulties faced by SMEs in gaining visibility and attracting sufficient trading volumes when listed along with other stocks on the Main Board of stock exchanges. World over, dedicated SME trading platforms or exchanges are prevalent, which are known by different names such as ‘Alternate Investment markets’ or ‘growth enterprises market’, ‘SME Board’ etc. In India we have BSE SME and NSE Emerge for SME listings.
Listing requirement for SMEs on SME Exchanges
Benefits of Listing on SME Platform
Modes of Listing:
Like the Main Board IPO, an SME IPO can be made either through the fixed price method or book building method. There lies considerable difference between the two types of issues, the key differences are enumerated below :
Listing Fees
BSE has set the annual fees for the Companies listed on the basis of market capitalization rather than the issue size. The fees for listing prescribed by BSE:
- One-time Listing Fees : INR 50,000
- Annual Fees based on the market capitalization, which shall be higher of INR 25,000 or 0.01% of full market capitalization
- A fee of INR 2.5 Lakh for use of Book Building software in case of an issue size up to INR 25 Crore, and INR 4 Lakh in case of an issue size above INR 25 Crore.