BSE has notified the new eligibility criteria that SMEs must meet to make a successful migration to main board of BSE:
- Capitalization Metrics: For a company to be considered eligible, it must exhibit financial strength. This is reflected in a paid-up capital of more than 10 Crores and a minimum market capitalization of Rs. 25 Crores. The market capitalization is calculated as the product of the average weekly high and low closing prices of the shares three months prior to the application.
- Promoter Holding: Promoters play a crucial role in the stability and direction of a company. To migrate to the BSE Main Board, the promoters must hold at least 20% of the equity share capital at the time of the application, ensuring a strong foundation for the company’s future endeavors.
- Financial Performance: Financial stability is a cornerstone of eligibility. The applicant company should demonstrate positive operating profit for at least two out of three financial years, coupled with positive Profit After Tax (PAT) in the immediate preceding financial year. Additionally, a minimum net worth of Rs. 15 Crores for the two preceding full financial years is required.
- Track Record and Regulatory Compliance: The track record of the company is scrutinized for at least three years on the SME Exchange, ensuring a history of responsible market conduct. Importantly, the company should have faced no material regulatory actions, suspensions, or debarments in the past three years, highlighting its adherence to regulatory norms.
- Shareholder Landscape: The strength of public participation is a significant parameter. An applicant company must have a minimum of 250 public shareholders according to the latest shareholding pattern, indicating a diversified and widespread investor base.
- Regulatory Clean Chit: The regulatory landscape should be free from blemishes. No material defaults or winding-up petitions should have been admitted by the National Company Law Tribunal (NCLT). Further, no disqualification or debarment of directors, promoters, or subsidiary companies by any regulatory authority is allowed.
- Utilization of Funds: Prudent financial management is underlined by the proper utilization of funds. An applicant company must obtain a certificate from a SEBI-registered credit rating agency, affirming the correct utilization of funds in line with the stated objectives post-IPO or any subsequent fund-raising events.
- Investor Relations and Complaints: Maintaining a clean track record, the applicant company should have no pending investor complaints. This showcases the commitment to transparent and ethical business practices.
- Cooling-off Period: Finally, a cooling-off period of two months is mandated from the date the security exits the trade-to-trade category or any other surveillance action, ensuring a stable market entry.