MSME listing: How to migrate from NSE SME platform to main board? Check revised criteria

Credit and finance for MSMEs: Effective from April 20, the applicant company should also have positive cash accruals (earnings before interest, depreciation and tax) from operations for each of the three financial years preceding the migration application.

Written by MSME Desk

April 23, 2023 13:20 IST

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NSE said there shouldn't be any petition for winding-up against the SME admitted by the National Company Law Tribunal (NCLT).

Credit and finance for MSMEs: The National Stock Exchange of India (NSE) has revised the eligibility criteria for SMEs looking to switch from its SME platform to the main board. The new guidelines require SMEs to list on the SME platform for at least three years along with a minimum net worth of Rs 50 crore and at least 1,000 public shareholders on the last day of preceding quarter from the date of application before moving to the main board.

Effective from April 20, the applicant company should also have positive cash accruals (earnings before interest, depreciation and tax) from operations for each of the three financial years preceding the migration application. In addition, the company should have positive PAT (profit after tax) in the immediate financial year of making the migration application to the exchange, NSE said in a circular on April 20.

Also read: SME IPOs jumped 84% in 2022 from previous year; raised nearly Rs 2,000 cr

Moreover, the paid-up equity capital (amount received by the company from shareholders in exchange for shares of stock) of the applicant should not be less than Rs 10 crores and the market capitalisation shouldn’t be less than Rs 25 crores. Market capitalisation or market cap is simply the market value of the company’s equity.

Other parameters of the migration policy included:

The SME should not have referred to the Board of Industrial & Financial Reconstruction (BIFR) and/or there should not have been any proceedings admitted under Insolvency and Bankruptcy Code against the issuer and promoting companies.
The applicant company should not have received any winding-up petition admitted by the National Company Law Tribunal (NCLT).
The company should have made disclosures for all material Litigation, dispute or regulatory actions to the stock exchanges where its shares are listed in an adequate and timely manner.

Also read: SMEs raised over Rs 900 crore through IPOs in FY22, up nearly 4X from previous year

The revised guidelines come amid a growing number of SMEs taking the IPO path to raise credit and grow. In 2022, the number of SME IPOs hitting stock exchanges (BSE SME and NSE Emerge combined) had jumped 84 per cent from 59 IPOs raising Rs 787 crore in the calendar year 2021 to 109 raising Rs 1,980 crore in 2022 — third highest after 144 SME IPOs in 2018 and 135 in 2017, as per data from market tracker Chittorgarh.com.

The SME IPOs have been on an upswing since 2020 when the count plunged to 27, the lowest since 2012 when the two SME exchanges BSE SME and NSE Emerge were launched. In comparison to SME IPOs, the number of mainboard issuances was low in 2022 with only 40 IPOs raising Rs 59,939 crore. 2022 mainboard IPOs were also down from 63 IPOs raising Rs 119,882 crore in 2021 while the gains were also relatively muted.