The Securities and Exchange Board of India (“SEBI”) has released a Consultation Paper on Review of SME segment framework under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”), and applicability of corporate governance provisions under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (“LODR Regulations”) on SME companies. Public comments on this consultation paper are invited until 4th December 2024.
Key Proposals:
1. Enhancements to SME IPO Process:
- Increase in minimum application size from ₹1 lakh to ₹2 lakh or ₹4 lakh.
- Introduction of phased lock-in periods for promoter holdings post-IPO.
- Restriction of Offer for Sale to 20% of issue size.
2. Corporate Governance Alignment:
- Extension of related-party transaction norms under LODR to SME listed entities.
- Quarterly filing of shareholding patterns, deviations, and financial results, instead of half-yearly.
- Requirement for disclosure of senior management and ESIC/EPF data.
3. Monitoring and Transparency Measures:
- Compulsory appointment of monitoring agencies for fresh issues above ₹20 crore.
- Statutory auditor certification for working capital fund utilization exceeding ₹5 crore.
4. Disclosures and Due Diligence:
- Mandatory public availability of draft red herring prospectuses (“DRHP”) for SME IPOs.
- Due-diligence certificates to be submitted at the DRHP filing stage.
- The consultation paper highlights SEBI’s intent to improve investor confidence and enhance transparency in the SME segment.
The comments/suggestions may be provided through the following modes:
- Online Submission: Comments can be provided through the web-based public comments form available at the following link: [Click here to provide your comments]
- Email Submission: In case of any issues with the online form, comments can be sent via mail, with the subject: “Consultation Paper on Review of SME Segment” to consultationcfd@sebi.gov.in
Please click on the hyperlink below to have a detailed read of the consultation paper and the instructions on submitting comments.
Source: Securities and Exchange Board of India
