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Any listed SME with a paid-up capital of more than Rs 10 crores can make a migration application to the BSE and the NSE Mainboard exchange, provided it fulfills the exchange migration criteria. Both the BSE SME and the NSE Emerge have laid down their migration guidelines for SMEs who wish to migrate to the mainboard.
The migration criteria include requirements related to minimum post-issue paid-up capital, a 3-year listing period on the SME exchange, minimum net worth, promoter participation, and more.
This guide explains what SME IPO migration entails, the migration criteria of BSE SME and NSE Emerge and the requirements that a listed SME company needs to fulfill to transfer its shares to the mainboard exchange after more than three years.
When an SME proposes to transfer its shares from the SME exchange of BSE and NSE to the main board exchanges, it is called migration. There are two ways through which SMEs can migrate to the BSE and NSE platforms.
When the paid-up capital of the listed SME exceeds Rs 10 crore but below Rs 25 crore, the company can opt for voluntary migration. To do so, SMEs can file migration applications to the exchange.
When the post-issue paid-up capital is more than Rs 25 crore, it becomes mandatory for the SME to shift to the mainboard exchange.
Migration from the SME platform to the mainboard requires SMEs to fulfill certain prerequisites such as it must have completed a minimum of 3 years since listing on the SME exchange. Other criteria include requirements for promoters’ shareholding, market capitalization, profitability, minimum number of shareholders, and more.
Once migrated, SME securities will be traded on the BSE and NSE exchanges.
SMEs that have migrated to the main board perform much better and provide better returns to investors.
Migration to the main board exchange has multifold benefits, such as follows;
As of Dec 6, 2023, as per the BSE SME platform data, out of 467 listed companies, 181 have migrated to the mainboard exchange.
SMEs that got listed on the BSE SME platform at least 3 years ago can move to the BSE mainboard exchange. In Nov 2023, BSE issued new guidelines on migration criteria applicable from 1 Jan 2024.
Any SME that complies with the below migration requirements relevant to paid-up capital, market capitalization, net worth, number of shareholders, etc. can migrate to the BSE.
Migration Requirements | |
Paid-up capital | The minimum post-issue paid-up capital required to migrate to the mainboard exchange is Rs 10 crores. listed SMEs must have a post-issue paid-up capital of more than Rs 10 crores. |
Net worth | The applicant entity requires to have a minimum net worth of Rs 15 crore for the preceding 2 full financial years to transfer securities to the BSE. SMEs below Rs 15 crores of net worth cannot be shifted to the main board exchange. |
Market Capitalization | SME's market capitalization shall be Rs 25 crore or above to move to the main board exchange. In this case, the market capitalization will be calculated based on the weighted average price of the preceding three months from the date of application for transfer to the Main Board. |
Listing period on BSE SME or track record | The applicant firm needs to be listed on the BSE SME platform for at least 3 years or above. Before Nov 23, SMEs were just required to complete 2 years of listing. |
Profitability Criteria | SMEs seeking to migrate must report positive EBITDA (Earnings Before interest, tax, and depreciation) in any 2 out of the last 3 financial years. SME must have positive profits after tax (PAT) in the immediate preceding financial year from the date of filing migration application to the bourse. |
Minimum number of shareholders | Before shifting to the mainboard exchange, SMEs should have at least 250 public shareholders in the company. |
Promoters shareholding | Promoters must hold at least 20% equity share capital at the time of applying for migration to the main board exchange. |
Special Resolution | Migration requires SMEs to pass a special resolution in the AGM (Annual General Meeting) with at least 2/3 shareholders (excluding company promoter/s). |
No debarment against promoters | The company's promoters and/or directors should not be debarred or prohibited by any regulatory authority or SEBI. |
No regulatory misconduct |
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Other requirements |
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A list of documents that a BSE-listed SME entity has to submit at the time of in-principle approval to the BSE exchange are;
SMEs with securities listed on the NSE Emerge platform can move to the NSE mainboard exchange.
The migration to the NSE exchange is subject to compliance with the exchange’s eligibility requirements.
Here’s the migration criteria of NSE SME platform explained in detail;
Migration Requirements | |
Paid-up capital | The paid-up equity capital of the SME company wishing to migrate should be minimum Rs 10 crore. |
Net worth | For shifting to main board, the applicant company must have a net worth of at least Rs 50 crore. |
Market Capitalization | The migrating company's market capitalization should not be less than Rs 25 crore. |
Listing period on NSE SME or track record | SMEs desirous to shift on the main board must have been listed on the NSE Emerge platform for at least 3 years. |
Profitability requirement | The applicant company should have positive EBITDA (Earnings before interest, tax, and depreciations) for all 3 financial years preceding the migration application submitted to exchange. In addition, the SME must be in profitable with positive profit after tax in the immediate financial year of presenting the application of migration to the respective exchange. |
Minimum number of shareholders | The total number of public shareholder should be at least 1000 on the last day of preceding quarter of making migration application to exchange. |
Other requirements i.e., no winding up petition, regulatory misconduct, etc. |
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An SME company listed on the NSE that wishes to migrate to the NSE Capital Market must submit the following documents to the Exchange along with the migration application.
As on Nov 30, 2023, total of 886 companies listed together on the BSE and SME exchange in India so far. Out of these, 319 companies have migrated to the main board exchange.
Number of companies migrated to the BSE and NSE are as follows;
Data: As on Nov 30, 2023
On migration to the Main Board exchange of BSE and NSE, the mainstream company has to comply with SEBI Listing Obligations and Disclosure Requirements Regulations 2015.
SMEs by complying with the respective exchange’s migration criteria can decide to migrate to the main board exchange.
Once the company gets listed on the main board exchange, its shares will no longer be traded in lots. SMEs migration helps the company to increase its brand visibility, investor base, and performance.
Once shares are migrated, it becomes a mainline company and comes under the direct supervision of market regulator SEBI.
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A company listed on the SME segment may migrate to the main board after completing 2 years since listing. There are two ways to move to the main board BSE and NSE platforms;