How to List on NSE EMERGE – SME Exchange
How to List on NSE EMERGE – SME Exchange
National Stock Exchange’s EMERGE platform is a SME stock exchange that allows startups and SMEs to list with or without an initial public offering (IPO). The NSE EMERGE platform connects growing businesses to a pool of sophisticated investors and help startups and SME raising equity funding. In this article, we look at the procedure for listing on the NSE EMERGE – SME Stock Exchange.
Benefits of Listing on the NSE EMERGE
Listing on the NSE EMERGE exchange has various benefits for startups and SME, other than raising of funds:
- Provides the company with lots of visibility and credibility amongst investors, customer, suppliers, employees and other stakeholders.
- Can help attract newer investors into the company.
- The company can raise money by diluting smaller stake to informed investors on need basis
- Can enable to the company to list on the NSE or other exchanges in the future.
- Provides credibility and value to the ESOP offered to employees
Listing Requirements on the NSE EMERGE Platform
An issuer, whose post issue face value capital is upto twenty five crore rupees is eligible to get its securities listed on the SME platform.
Further, to be eligible to list on the NSE EMERGE platform, the entity must first satisfy one of the following conditions:
- An entity which is intensive in the use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology to provide products, services or business platforms with substantial value addition and at least twenty five per cent of its pre-issue capital is held by qualified institutional buyer(s) as on the date of filing of draft information document or draft offer document with the Board, as the case may be; OR
- Any other entity in which at least fifty per cent of the pre-issue capital is held by qualified institutional buyers as on the date of filing of draft information document or draft offer document with the Board, as the case may be.
Hence, only companies that have Qualified Institutional Buyer(s) already subscribe to its shares are eligible to list on the NSE EMERGE exchange.
If the company satisfies one of the above condition, then the following additional conditions must also be satisfied:
- The company, its promoter, group company or director does not appear in the willful defaulters list of Reserve Bank of India as maintained by Credit Information Bureau (India) Limited;
- There is no winding up petition against the company that has been admitted by a competent court;
- The company, group companies or subsidiaries have not been referred to the Board for Industrial and Financial Reconstruction within a period of five years prior to the date of application for listing;
- No regulatory action has been taken against the company, its promoter or director by SEBI, Reserve Bank of India, Insurance Regulatory and Development Authority or Ministry of Corporate Affairs within a period of five years prior to the date of application for listing;
NSE EMERGE – Listing Procedure
Appointment of Merchant Banker
The company must first select and appoint a Merchant Banker to act as Advisor for the listing of the company on the NSE EMERGE platform.
Preparing the Entity
To be eligible to list on the NSE, the company must first be incorporated (preferably as a Limited Company). The Articles of Association of the Company must then be modified or must contain the following provisions:
- There shall be no forfeiture of unclaimed dividends before the claim becomes barred by law;
- Common form of transfer shall be used;
- Fully paid shares shall be free from all lien and that in the case of partly paid shares the Issuer’s lien shall be restricted to moneys called or payable at a fixed time in respect of such shares;
- Registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Issuer on any account whatsoever;
- Any amount paid up in advance of calls on any share may carry interest but shall not in respect thereof confer a right to dividend or to participate in profits;
- Option or right to call of shares shall not be given to any person except with the sanction of the Issuer in general meetings;
- Permission for Sub-Division/Consolidation of Share Certificate.
Filing Draft Prospectus
The Issuer must then file the draft prospectus and application forms with NSE Exchange. The draft prospectus should have been prepared in accordance with the statutes, notifications, circulars, guidelines, etc. governing preparation and issue of prospectus prevailing at the relevant time. The appointed Merchant Banker can help the company prepare the necessary documents at this stage.
On completing of the draft prospectus, the issuer desiring to list new securities on the Exchange can make application for admission of their securities to dealings on the Exchange. The documents required at this stage would be:
- Clauses of Articles of Association
- Application Letter for Listing
- Listing Application providing pre-issue details of securities
- Listing Application providing post-issue details of securities
- Checklist for supporting documents
- Schedule of Distribution
- Listing Agreement