Bill to resolve SMEs’ fund raising woes

NEW DELHI: The problem of garnering funds by small and medium enterprises (SMEs) may be partially resolved with the passage of the Limited Liability Partnership Bill, 2006, that is expected to be okayed by Parliament this July.

This was indicated by Jawhar Sircar, additional secretary and development commissioner of the ministry of small scale industry (SSI).

At a seminar organised by Engineering Export Promotion Council (EEPC), Mr Sircar said once the Bill is translated into Act, it will ensure, inter alia, limited liability of partners, in case an SME turns sick. This will encourage fund infusion by willing investors into SMEs as strategic equity partners in those enterprises, explained Mr Sircar.

The Bill, which was piloted by Union ministry of company affairs, is awaiting approval from the Rajya Sabha. Ensuring limited liability of partners, the Bill paves the way for equity participation in SMEs by professionals, IT companies and venture capitalists.

Though talks are doing the rounds on formation of a separate platform for trading in SME securities, the SSI ministry is yet to receive a formal proposal either from Sebi or NSE on the matter.

Once a formal proposal is received, the matter will be placed before the National Board on SSIs, under the ministry, to discuss what enabling provisions are required for participation of SMEs in stock trading, said Mr Sircar.