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LISTING OF SME ON BSE

CRITERIA FOR LISTING

1.IncorporationThe Company shall be incorporated under the Companies Act, 1956.

2.Financials Post Issue Paid up Capital

The post-issue paid up capital of the company shall be at least Rs. 1 crore.

NetworthNet worth (excluding revaluation reserves) of at least Rs.1 crore as per the latest audited

financial results.

Net Tangible AssetsAt least Rs.1 crore as per the latest audited financial results.

Track RecordDistributable profits in terms of Section 205 of the Companies Act 1956 for at least two years

out of immediately preceding three financial years (each financial year has to be a period of

at least 12 months). Extraordinary income will not be considered for the purpose of

calculating distributable profits.

Or

The net worth shall be at least Rs.3 crores.

3.CapitalThe post issue face value capital should not exceed Rs. Twenty-five crores.

4.Trading lot size The minimum application and trading lot size shall not be less than Rs. 1,00,000/- The minimum depth shall be Rs 1,00,000/- and at any point of time it shall not be less than

Rs 1,00,000/-

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The investors holding with less than Rs 1,00,000/- shall be allowed to offer their holding tothe Market Maker in one lot.

However in functionality the market lot will be subject to revival after a stipulated time.5.Participants

The existing Members of the Exchange shall be eligible to participate in SME Platform.

6.UnderwritingThe issues shall be 100% underwritten and Merchant Bankers shall underwrite 15% in their

own account.

7.Other Requirements

It is mandatory for a company to have a website. It is mandatory for the company to facilitate trading in demat securities and enter into an

agreement with both the depositories.

There should have been no change in the promoters of the Company in the one yearpreceding the date of filing application to BSE for listing on SME segment.

For listing on BSE SME platform promoters will mandatorily be required to attend aninterview with the Listing Advisory Committee.

8.DisclosuresA certificate from the applicant company / promoting companies stating the following

a) " The Company has not been referred to the Board for Industrial and Financial

Reconstruction (BIFR)."

Note:Cases where company is out of BIFR is allowed.

b) There is no winding up petition against the company, which has been admitted by the

court or a liquidator has not been appointed.

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PROCEDURE

Planning

The Issuer Company consults and appoints the Merchant Banker/s in an advisory capacity.

Preparation

The Merchant Banker prepares the documentation for filing after:

conducting due diligence regarding the Company i.e checking the documentation includingall the financial documents, material contracts, Government Approvals, Promoter details etc.

and planning the IPO structure, share issuances, and financial requirementsProcess

Application procedure:

Submission of DRHP/Draft Prospectus - These documents are prepared by the MerchantBanker and filed with the Exchange as well as with SEBI as per requirements.

Verification & Site Visit - BSE verifies the documents and processes the same. A visit to thecompany's site shall be undertaken by the Exchange official .The Promoters are called for aninterview with the Listing Advisory Committee.

Approval - BSE issues an In Principle approval on the recommendation of the Committee,provided all the requirements are compiled by the Issuer Company.

Filing of RHP/Prospectus - Merchant Banker files these documents with the ROC indicating

the opening and closing date of the issue.

Once approval is received from the ROC, they intimate the Exchange regarding the opening

dates of the issue along with the required documents.

Public OfferingThe Initial Public Offer opens and closes as per schedule. After the closure of IPO, the

Company submits the documents as per the checklist to the Exchange for finalization of the

basis of allotment.

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Post ListingBSE finalizes the basis of allotment and issues the Notice regarding Listing and Trading.

A flow chart depicting the various steps for listing a company on BSE is as follows:

Conversion of company into public limited company, if applicable

Preparation of documents for conversion and submission to ROCfor approval i.e., Alteration of Memorandum, Articles & filing of

necessary forms for appointment of aforesaid directors.

ROC approval accorded for conversion

Identification & appointment of Registrar & Transfer Agents &submission of Master Creation forms with NSDL, CDSL for

establishing connectivity

Appointment of Managing Director, Whole-time Director,Independent Directors, Company Secretary & deciding about their

remuneration, sitting fees etc.

Constitution of committeesAudit, Shareholder, Grievance,Remuneration etc. as per SME listing agreement

Preparation of website of the company and hosting code of conducton the website

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Signing of Tri-Partite Agreement with NSDL & CDSL & receipt of ISIN

Identification & appointment of peer review auditors & getting thefinancials of last 5 years restated & for last 1 year re-audited from

peer review auditors as per SEBI regulations, 2009

Appointment of Merchant Banker & Market Maker

Preparation of Project Report & Red Herring Prospectus(RHP)

Filing of Red Herring Prospectus with Stock Exchange & SEBI(only forhosting) & along with application for in-principle approval with Stock

Exchange

Clearance from Stock Exchange

Filing of Red Herring Prospectus with ROC & getting it cleared fromROC

Filing of Final Prospectus with Stock Exchange & SEBI

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Opening of the Issue

Closnig of the Issue

Allotment of shares

Filing of listing application with Stock Exchange

Receipt of listing approval from Stock Exchange

Filing of Corporate Action Form with NSDL & CDSL and demat credit ofshares

Filing of trading application with Stock Exchange

Receipt of trading approval from Stock Exchange

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CHECKLIST OF DOCUMENTS

Along with the application for using the name of the Exchange in the offer document, the

following documents/information shall to be filed by the Company with the Exchange:

1. 10 copies of the draft offer document.

2. Soft copy of the Prospectus for uploading on website

3. Copy of resolution passed by the Board of Directors for issue of securities

4. Copy of the shareholders resolution under 81(1A) of Companies Act, 1956

5. Certificate from the Managing Director / Company Secretary or PCS / Statutory or

Independent Auditors stating the following:

a) The Company has not been referred to the Board for Industrial and Financial

Reconstruction (BIFR).

b) There is no winding up petition against the company that has been accepted by a court.

c) There has beenno change in the promoter/s of the Company in the preceding one year

from date of filing application to BSE for listing on SME segment.

6. Copy of all show cause notice(s)/order(s) issued by any regulatory authority (e.g. SEBI,

ROC, RBI, CLB, Stock Exchange etc.) & correspondence there to.

7. PAN & TAN of the Company.

8. DIN & PAN of Promoters and Directors

9. Printed Balance Sheets, Profit & Loss Accounts and Cash Flow Statements for the preceding 5

years (or for such applicable periods)

10. Copies of major orders/contracts/ received/ executed/ in-hand should be kept ready and

be available for inspection. A statement of material contracts duly certified by a practicing

Chartered Accountant/ practicing Company Secretary should be submitted. The Company

should also state the place, time and date where these documents can be inspected

11. A statement containing particulars of the dates of, and parties to all the material contracts,

agreements (including agreement for technical advice and collaboration), concessions and

similar other documents (except those entered into in the ordinary course of business

carried on or intended to be carried on by the company) together with a brief description of

the terms, subject matter and general nature of the documents.

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12. Details if the present or any previous application of the Company/Group Company for listing

of any securities has been rejected earlier by SEBI or by any stock exchange and

reasons thereof.

13. Name of the exchange which is proposed to be designated Exchange for the issue, if

decided.

14. Copies of agreements and memoranda of understanding between the Company and its

promoters/ directors.

15. Articles & Memorandum of Association of the Company.

16. A certificate from the statutory auditor/practicing chartered accountant certifying

compliance of conditions of Corporate Governance as stipulated in clause 52 of the listing

agreement and circular no. SEBI/CFD/DIL/CG/1/2004/12/10 dated October 29, 2004 issued

by the Securities and Exchange Board of India (SEBI). The company should also give the

composition of various committees as required under the said clause.

17. Association, if any, of the directors/ promoters of the Company with any public or rights

issue made during the preceding 10 years.

18. One Time Listing Fees of Rs. 50,000/ plus applicable Service Tax. (Details of all applicable

fees for SME Listing is attached)

19. Date of opening of public issue to be intimated as soon as it is finalized.20. Due Diligence Certificate as submitted to SEBI addressed and submitted to BSE.

21. SEBI scores registration

Also, a questionnaire intended to elicit information from SMEs who intend to raise capital on

BSE SME Exchange needs to be filled out.

The link to the questionnaire:Information Questionnaire

http://www.bsesme.com/GetListed/Questionnaire.aspx?expandable=1http://www.bsesme.com/GetListed/Questionnaire.aspx?expandable=1http://www.bsesme.com/GetListed/Questionnaire.aspx?expandable=1http://www.bsesme.com/GetListed/Questionnaire.aspx?expandable=1

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Further, a Register your Interest form maybe filled out to register either as a Listed Company

or as a Market Maker

Link:Register Your Interest

BENEFITS OF LISTING

Easy access to CapitalBSE SME provides an avenue to raise capital through equity infusion for growth oriented

SMEs.

Enhanced Visibility and PrestigeThe SMEs benefit by greater credibility and enhanced financial status leading to demand inthe companys shares and higher valuation of the company.

Encourages Growth of SMEsEquity financing provides growth opportunities like expansion, mergers and acquisitions thus

being a cost effective and tax efficient mode.

Ensures Tax BenefitsIn case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term

Capital Gains Tax.

Enables Liquidity for ShareholdersEquity financing enables liquidity for shareholders, provides growth opportunities likeexpansion, mergers and acquisitions, thus being a cost effective and tax efficient mode.

Equity financing through Venture CapitalProvides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing

their lock in period.

Efficient Risk DistributionCapital Markets ensure that the capital flows to its best uses and that riskier activities with

higher payoffs are funded.

Employee IncentivesEmployee Stock Options ensures stronger employee commitment, participation andrecruitment incentive.

http://www.bsesme.com/GetListed/Regist_From.aspx?expandable=2&ddlid=LChttp://www.bsesme.com/GetListed/Regist_From.aspx?expandable=2&ddlid=LChttp://www.bsesme.com/GetListed/Regist_From.aspx?expandable=2&ddlid=LChttp://www.bsesme.com/GetListed/Regist_From.aspx?expandable=2&ddlid=LC

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Captain Polyplast LimitedExample

In December 2013, Gujarat based Captain Polyplast Limitedthe manufacturer, exporter and

trader of supreme quality HDPE pipes and irrigation equipment, listed itself on the SME

platform of BSE Limited. The company has come out with its public issue of 19.80 lakh equity

shares of a face value of Rs.10 each. Rs.5.94 crore was raised through the issue at a cash price

of Rs.30 per equity share.

The capital structure after being listed on BSE is as follows:

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The company intends to utilize the proceeds of the issue to meet the following objectives:

To fund the expansion plans General corporate purpose

To meet the issue expenses

In addition, the company expects to receive benefits from listing of equity shares on the SME

platform of BSE. The listing will enhance the corporate image and the brand name of the

company.

The total estimated fund requirement of the company is as below:

Following are the means of finance to finance the fund requirements:

The details of use of issue proceeds are:

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The intended use of the net proceeds of Rs.564 Lakhs is as follows:

The management, in accordance with the policies established by the Board of Directors, will

have flexibility in deploying the proceeds received from the Issue. Pending utilization of the

proceeds of the Issue for the purposes described above, the funds maybe invested in high

quality interest bearing liquid instruments including money market mutual funds, deposits withbanks or temporarily deploy the funds in working capital loan accounts and other investment

grade interest bearing securities as may be approved by the Board of Directors. Such

investments would be in accordance with the investment policies approved by the Board of

Directors from time to time and at the prevailing commercial rates at the time of investment.

The net worth of the company as on 31ST

March, 2013 was Rs.1208.34 lakhs. Since, the

company has nil intangible assets, the net worth is the tangible net worth.