Sebi plans to ease many SME IPO rules, lower application amount

Mumbai:The capital-markets regulator on Wednesday proposed an overhaul of rules governing initial share sales by small and medium enterprises (SMEs). The proposals include halving the minimum application amount, scrapping compulsory market making, and easing underwriting needs to help reduce the cost of raising capital.

The Securities and Exchange Board of India (Sebi) has proposed lowering the minimum application amount for SME IPOs to ₹1 lakh from ₹2 lakh, with a minimum lot value of ₹25,000 and a requirement to apply for at least four lots. It has also proposed to introduce a one share trading lot for SME listed securities.

"The existing requirement of two lots per application with a minimum application value above ₹2 lakh may limit participation and may not appropriately balance accessibility with the objective of ensuring meaningful applications," Sebi said in a discussion paper on Wednesday.


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The regulator has suggested replacing the existing paid-up capital based eligibility criteria with market capitalisation thresholds and raising the minimum profitability requirement.

Under the proposed framework, companies with post-issue market capitalisation of up to ₹1,000 crore would be required to list on the SME platform.

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Those valued above ₹1,000 crore and up to ₹4,000 crore could choose between the SME platform and the main board, while companies exceeding ₹4,000 crore in market value would have to compulsorily pursue a main board listing.