The Bombay Stock Exchange launched an institutional trading platform (ITP) for small and medium enterprises on 12 February 2014.
The launch will facilitate the start-up companies and SMEs to list without IPO.
The launch of BSE SME ITP is consequent to the provision of SEBI in ICDR (Issue of Capital and Disclosure Requirements) guidelines allowing SMEs to list on the exchange without bringing in initial public offer (IPO).
It will help the start-up companies to raise capital and it will also provide easier entry and exit options for informed investors like angel investors, VCFs and PEs etc.
The new platform offers better visibility and wider investor base while offering tax benefits to long term investors.
The listing process in the new platform will be done within one month as against the couple of months that a regular IPO route would take. Costs would be just a tenth of the IPO process.
As per the regulatory norms, the BSE SME institutional trading platform has provided an exemption to SMEs, under which companies have to offer up to 25 percent of its share holding through an IPO.
Any company with a paid up capital not exceeding 25 crore rupees in any of the previous financial years and has at least one full year's audited financial statements for the immediately preceding financial year at the time of making listing application is eligible to get listed at the BSE SME ITP.
Any company that has not completed a period of more than 10 years after incorporation and its revenues have not exceeded 100 crore rupees in any of the previous financial years is also one of the eligibility criterion.