BSE to encourage Small Capital Companies

At present, The Stock Exchange, Mumbai (BSE) allows listing of shares of the companies with a post issue capital of Rs. 10 crores or a post issue capital Rs. 5 crores with a market capitalization of Rs. 50 crores.

In a significant move to facilitate grounds for higher business activity in the Indian Economy, through small enterprises the Exchange has permitted listing of the shares issued by the small cap companies from the capital markets.

BSE has designed a unique scheme and has plans to create a distinct securities segment of small cap companies. These companies would be required to meet the SEBI guidelines for making Initial Public Offer (IPO) which are broadly discussed in Annexure I.

In addition to the SEBI prescribed requirements, BSE has prescribed the following additional requirements:

• The minimum post issue paid up capital of the company should be Rs. 3 crores.
• The Companies should have a minimum turnover of Rs. 3 crores in each of the previous 3 years.
• A due- diligence to be done by an Exchange appointed independent team of CAs or merchant banker. This team may also include Exchange representative. The due-diligence exercise may include plant/site/office visit of the company over and above the existing statutory requirement in this regard. This may be waived if a Financial Institution or Scheduled Commercial Bank has appraised the project in the preceding 12 months.
• Minimum public shareholders 500.
• The Company would be required to hold a shareholders' meeting at least once in a year in Mumbai.

The Exchange would however vet the listing applications on a case- to -case basis and reserves the right to reject any application for listing without assigning reasons therefor.

Dr. Manoj Vaish, Chief Executive Officer (CEO) and Executive Director (ED), BSE says, "The role of small enterprises in any economy is crucial for the growth. The companies which at present may be small in size hold good potential of growing big and handling large business activity. Some of these companies would eventually attain international size and be the engine of growth for the economy."

He adds, "This measure would enable raising of fresh capital by small companies, which would help the growth in the economy and overall development of the country. This would also enable the companies, which are currently listed only at RSEs to have national presence through BSE's trading platform."