The Securities and Exchange Board of India (SEBI), on November 19, 2024, issued a notification related to the Consultation Paper on the Review of the SME segment framework under SEBI (ICDR) Regulations, 2018 and the applicability of corporate governance provisions under SEBI (LODR) Regulations, 2015.
To support Small and Medium Enterprises (SMEs) in accessing finance, SEBI established dedicated exchanges/platforms for listing and trading SME securities in 2008. Key regulations include Chapter IX of SEBI (ICDR) Regulations, which outlines SME IPO eligibility, such as post-issue paid-up capital limits (up to ₹25 crore) and track record requirements. Unique features include waived DRHP filings for SMEs, higher minimum application amounts (₹1 lakh), and market-making obligations for lead managers post-listing.
SMEs listed on specialized exchanges can migrate to the Main Board or vice versa, subject to capital limits and stock exchange criteria. SMEs are mandated to submit abridged half-yearly financial results instead of quarterly results required for Main Board entities. Corporate governance requirements under SEBI (LODR) Regulations are relaxed for SME entities, with exemptions for smaller listed entities with paid-up capital below ₹10 crore and net worth under ₹25 crore.
SEBI invites public comments on proposed SME framework revisions, focusing on listing, migration, and governance requirements. Stakeholders are encouraged to provide feedback via SEBI’s online portal or email by December 4, 2024. This consultation aims to refine regulations to ensure SME market transparency and effectiveness while balancing compliance requirements.
