SMEs can now list without IPO

The small and medium enterprises (SME) will be permitted to list on the SME exchanges without even making an initial public offering (IPO) as per the Union Budget 2013-14 proposals tabled in the parliament on Thursday but such issues will be restricted to only informed investors.

The proposed move will give a significant boost to the two SME exchanges — NSE's Emerge and BSE SME — which are trying to woo small companies to list on their platforms.

Top brasses at both bourses said that it's a welcome move as it will bring more facilitate listing of more companies. Finance Minister P Chidambaram in his Budget speech stated that the move to allow companies list without an IPO is in addition to the existing SME platform, where a company can list by conducting a public issue with wider investor participation, including that of retail investors.

Ravi Tyagi, head of the SME project at NSE said, “We welcome this as it make it easier for smaller companies to get listed. However, we have to see how they defining the 'informed investors'.”

Launched almost last year back, the SME platform for smaller companies –- having paid-up capital of less than Rs 25 crore -- is yet to take off in the big way with just two companies listing on Emerge and about a dozen on BSE SME.