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Mumbai, Sept. 29: The Bombay Stock Exchange (BSE), trying to catch up with the more successful National Stock Exchange (NSE), has thrown its doors open to companies with a post-issue capital of just Rs 3 crore.
The relaxation in listing requirements will benefit small enterprises, typically those propped up by venture capital funds, but will push business-starved regional bourses that live off these companies closer to the brink.
At present, firms with a post issue capital of Rs 10 crore and a market capitalisation of Rs 50 crore are listed.
The move is expected to stimulate the market for initial public offerings (IPO) by prompting smaller companies to wade into the current stock surge to raise cash.
BSE has devised a unique scheme and plans to create a separate securities segment for small-cap companies. However, they will have to meet IPO norms set by the Securities and Exchange Board of India (Sebi).
In addition to these rules and the minimum post-issue paid-up capital of Rs 3 crore, the exchange says firms should have a minimum turnover of Rs 3 crore in each of the previous three years.
“A due diligence will be done by an exchange-appointed independent team of chartered accountants or a merchant banker. Plants, sites, offices could be examined. This may be waived if a financial institution or a scheduled commercial bank has appraised the project in the last 12 months,” a press release issued by the exchange said.
Other requirements would include having a minimum of 500 shareholders and holding shareholders’ meeting at least once a year in Mumbai.
Listing applications will be cleared on a case-to–case basis. The exchange can reject them without explaining.
BSE chief executive Manoj Vaish said since the role of small enterprises in any economy is crucial to overall growth, companies that are small and have the potential to handle larger volumes of business must be given a trading platform. “Some of them would eventually attain an international size and be the engine of growth.”
Vaish said easier listing rules would enable small firms to raise fresh capital and help them break out of the confines of smaller bourses to acquire a national scale.
Companies must have net tangible assets of at least Rs 3 crore in each of the preceding three years, a track record of distributable profits for at least three of the past five years, and a net worth of Rs 1 crore in each of the last three years under rules laid down by Sebi.
If a firm changes its name, at least 50 per cent of the revenues in the preceding year should come from the business that its new identity would suggest or signify.