SME IPO Migration: Key Changes in SEBI Guidelines

On 18th December 2024, the Securities and Exchange Board of India (SEBI) issued revised guidelines for Small and Medium Enterprises (SMEs) seeking to migrate from the SME platform to the mainboard of stock exchanges. These updated norms aim to ensure financial robustness and operational stability for companies making the transition. The guidelines apply to both BSE and NSE platforms and are as follows:

Migration to Mainboard
For SMEs to migrate to the BSE Mainboard, they must meet the following criteria:

• Paid-up Capital: The company should have a paid-up capital exceeding ₹10 crores.
• Market Capitalization: The company’s market capitalization must be at least ₹25 crores.
• Net Worth: A minimum net worth of ₹15 crores for the two preceding full financial years is required.
• Listing Duration: The company must have been listed on the SME platform of the Exchange for at least three years.
• Positive EBITDA: The company should have posted a positive EBITDA for at least two out of the last three financial years.
• Positive PAT: A positive Profit After Tax (PAT) in the immediate financial year of making the migration application is necessary.
  Migration to NSE Mainboard

For SMEs to migrate to the NSE Mainboard, the guidelines are slightly stricter, requiring:

• Paid-up Capital: The company must have a paid-up capital of ₹10 crores or more.
• Market Capitalization: A minimum market capitalization of ₹25 crores is mandatory.
• Net Worth: The company should have a net worth of at least ₹75 crores.
• Listing Duration: A listing period of three years on the SME platform is essential.
• Positive EBITDA: A positive EBITDA from operations for each of the preceding three financial years is required.
• Positive PAT: The company must show a positive PAT in the immediate financial year prior to applying for migration.

Disclaimer
These guidelines, issued on 18th December 2024, are subject to change at the discretion of the exchanges.

The revised criteria reinforce the importance of consistent financial performance and operational maturity for SMEs looking to scale up to the mainboard.

The image added is for representation purposes only