21 May 2010 | By: Mohamed Hairul Borhan

The Securities and Exchange Board of India (SEBI) has relaxed share-listing norms for small and medium enterprises (SMEs) by allowing them to disclose their financial results every six months instead of three months, following the practice already in place for bigger companies.

Companies listed on the SME exchange will not be required to send a full annual report to their shareholders and also need not publish their financial results as required in the main stock exchange.

“Companies listed on the SME exchange may send to their shareholders a statement containing the salient features of all the documents,” the regulator said in its circular.

But these companies will have to maintain a public shareholding of at least 25 per cent of the total number of issued shares at all times. In other words, the promoters’ stake cannot exceed 75 per cent.

A company listed on the SME exchange, having post-issue capital between Rs10 crore (S$3.01 million) and Rs25 crore can migrate to the main exchange provided it meets the listing requirements of the stock exchange. For this purpose, the company must first make a proposal to list the specified securities and obtain the prior approval of its shareholders.

“The issue shall be 100 per cent underwritten and the merchant bankers shall underwrite 15 per cent in their own account. Merchant bankers can also enter into an agreement with nominated investors to subscribe to the unsubscribed portion of the issue,” the SEBI circular said.

A stock broker of the main exchange need not seek fresh registration for trading on the SME platform. Similarly, a sub-broker also need not seek fresh registration, where s/he is affiliated to stock broker who is eligible to trade on SME platform.

*Exchange rate correct as of 21 May 2010

Courtesy of IBEF