The SME IPO Handbook · Chapter 3 of 12
Eligibility and Listing Criteria
What an SME needs to list
Exchanges set conditions such as a minimum track record, positive net worth, positive operating profit in recent years, and a cap on post-issue paid-up capital. The exact numbers are in the exchange rulebooks and the SEBI regulations, and they are revised from time to time.
The merchant banker's role
A merchant banker prepares the prospectus and certifies due diligence. Check which bankers have taken previous SME issues and how those listed and performed. LiveIPOData's Lead Managers report ranks bankers by number of issues and listing gains.
The role of the exchange
The exchange scrutinises the draft offer document and approves listing. Approval is a check that conditions are met; it is not an assessment of the quality of the investment.
Why this matters to you
Eligibility rules set a floor, not a quality bar. A company can meet every condition and still be a poor investment at the price offered.
Key takeaways
- Exchanges set minimum track record, profit and capital conditions.
- Check the lead manager's earlier SME listings.
- Meeting criteria does not mean the company is a good investment.
- Exchange approval is not a quality certificate.