SEBI to impose stricter norms for SME listings

India’s market regulator, soon will bring new regulations for public offers of small and medium enterprises (SMEs), after complaints of misuse of a separate listing platform introduced in 2012 to enable small businesses access the capital markets.

The regulator, the Securities and Exchange Board of India (SEBI), is considering raising the minimum size of such public offers to 300 million-500 million Indian rupees ($3.59 million-$5.99 million), as reported by Reuters.

The news rules will come into force towards later part this year after consulting the stakeholders. Currently there is no minimum issue size prescribed but companies listing on the platform are required to have a post issue capital base of 250 million rupees.

SMEs in India are defined as companies with an annual turnover of 50 million to 2.5 billion rupees.

Some of these issues were subscribed 500-1000 times, raising concerns around misuse of the platform, it’s been reported. Alongside introducing a minimum issue size, these companies will also be asked to make more disclosures, which is currently not the case.

"The merchant bankers will also be asked to make more upfront disclosures of objects of the issue, financials of the issuer and risk factors,", reports the insider.