{"id":3027,"date":"2024-12-23T09:35:21","date_gmt":"2024-12-23T09:35:21","guid":{"rendered":"https:\/\/www.mmjc.in\/?p=3027"},"modified":"2025-11-10T09:49:57","modified_gmt":"2025-11-10T09:49:57","slug":"revamping-sme-market-norms-sebi-board-meeting-december-18-2024","status":"publish","type":"post","link":"https:\/\/bempl.in\/demo\/mmjc\/revamping-sme-market-norms-sebi-board-meeting-december-18-2024\/","title":{"rendered":"Revamping SME Market Norms \u2013 SEBI board meeting December 18, 2024"},"content":{"rendered":"\n<p>Securities and Exchange Board of India (SEBI) reviewed the Small and Medium Enterprises (SME) framework under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 [\u2018ICDR\u2019], and applicability of corporate&nbsp; governance&nbsp; provisions&nbsp; under&nbsp; SEBI&nbsp; (Listing Obligations and Disclosure Requirements) Regulations, 2015 [\u2018LODR\u2019] on SME companies and gave an in-principle approval for amendments to the ICDR and LODR at its 208<sup>th<\/sup>&nbsp; board meeting.<\/p>\n\n\n\n<p>SEBI had floated a consultation paper on revamping norms dt: November 19, 2024<a id=\"_ftnref1\" href=\"#_ftn1\">[1]<\/a> . Below is the summary of decisions taken at SEBI board:<\/p>\n\n\n\n<p><strong>1.<\/strong> <strong>Eligibility Criteria for IPOs<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Issuers should have an operating profit (EBITDA) of \u20b93 crore from operations for at least 2 out of 3 financial years before applying.<\/li><li><strong>Approved Amendment:<\/strong> Issuers can make an IPO with an operating profit of \u20b91 crore from operations for any 2 out of 3 financial years at the time of filing the DRHP.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>2.&nbsp;Offer for Sale (OFS) in SME IPOs<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Limit OFS to 20% of the issue size and selling shareholders cannot sell more than 20%of their pre-issue holding.<\/li><li><strong>Approved Amendment:<\/strong> OFS is capped at 20% of the total issue size, but selling shareholders can sell up to 50%of their holdings.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>3.<\/strong> <strong>Lock-In Period for Promoters&#8217; Shares<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Increase lock-in on Minimum Promoter Contribution (MPC) to 5 years. For holdings above MPC, release 50% after 1 year and the rest after 2 years.<\/li><li><strong>Approved Amendment:<\/strong> Lock-in for shares exceeding MPC will be released in the proposed phased manner: 50% after 1 year and the remaining 50% after 2 years. No changes to MPC lock-in.<\/li><\/ul>\n\n\n\n<p><strong>4. Allocation for Non-Institutional Investors (NIIs)<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Divide NII allocation into two subcategories based on application size (up to \u20b910 lakh and above \u20b910 lakh). Discontinue proportionate allotment and use a &#8220;draw of lots&#8221; for oversubscription, like the retail investor category.<\/li><li><strong>Approved Amendment:<\/strong> Align the NII allocation methodology for SME IPOs with that of the main board IPOs.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>5.<\/strong> <strong>Cap on General Corporate Purpose (GCP) Funds<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Limit GCP to 10% of the issue size or \u20b910 crore, whichever is lower, and delete the provision for unidentified targets\/acquisitions.<\/li><li><strong>Approved Amendment:<\/strong> GCP amount is capped at 15% of the issue size or \u20b910 crore, whichever is lower.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>6.<\/strong> <strong>Restriction on Repayment of Promoters&#8217; Loans<\/strong><\/p>\n\n\n\n<p><strong>Both Proposed and Approved:<\/strong> SME IPO proceeds cannot be used to repay loans taken by promoters, promoter groups, or related parties.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>7.<\/strong> <strong>Public Comments on DRHP<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> DRHP for SME IPOs should be open for public comments for 21 days, hosted on stock exchanges and lead managers&#8217; websites, with newspaper announcements.<\/li><li><strong>Approved Amendment:<\/strong> DRHP to be available for 21 days for public comments with a newspaper announcement containing a QR code for easy access.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>8. Further Issue Without Migration to Main Board<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Allow SMEs to raise funds without migrating to the Main Board, provided they comply with Main Board LODR governance and disclosure norms if their post-issue paid-up capital exceeds \u20b925 crore.<\/li><li><strong>Approved Amendment:<\/strong> SMEs can raise funds without migrating to the Main Board but must comply with Main Board LODR norms.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>9.<\/strong> <strong>Related Party Transactions (RPT) Norms for SMEs<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Consultation Paper Proposal:<\/strong> Extend RPT norms to SME listed entities, exempting those with paid-up capital \u2264 \u20b910 crore and net worth \u2264 \u20b925 crore. Materiality threshold set at 10% of turnover or Rs 100 crore whichever is lower.<\/li><li><strong>Approved Amendment:<\/strong> Extend RPT norms to SMEs with a materiality threshold of 10% of turnover or \u20b950 crore, whichever is lower. No clarity yet on whether entities with paid-up capital \u2264 \u20b910 crore and net worth \u2264 \u20b925 crore would be exempted from RPT provision.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p>[1] <a href=\"https:\/\/www.sebi.gov.in\/reports-and-statistics\/reports\/nov-2024\/consultation-paper-on-review-of-sme-segment-framework-under-sebi-icdr-regulations-2018-and-applicability-of-corporate-governance-provisions-under-sebi-lodr-regulations-2015-on-sme-companies-to-_88627.html\">https:\/\/www.sebi.gov.in\/reports-and-statistics\/reports\/nov-2024\/consultation-paper-on-review-of-sme-segment-framework-under-sebi-icdr-regulations-2018-and-applicability-of-corporate-governance-provisions-under-sebi-lodr-regulations-2015-on-sme-companies-to-_88627.html<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>For More Information Click on the link:<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.sebi.gov.in\/media-and-notifications\/press-releases\/dec-2024\/sebi-board-meeting_90042.html\">https:\/\/www.sebi.gov.in\/media-and-notifications\/press-releases\/dec-2024\/sebi-board-meeting_90042.html<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Securities and Exchange Board of India (SEBI) reviewed the Small and Medium Enterprises (SME) framework under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 [\u2018ICDR\u2019], and applicability of corporate&nbsp; governance&nbsp; provisions&nbsp; under&nbsp; SEBI&nbsp; (Listing Obligations and Disclosure Requirements) Regulations, 2015 [\u2018LODR\u2019] on SME companies and gave an in-principle approval for amendments to the ICDR [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":96,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,8,29],"tags":[],"class_list":["post-3027","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-knowledge-hub","category-newsletter","category-sebi-lodr"],"_links":{"self":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/3027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/comments?post=3027"}],"version-history":[{"count":1,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/3027\/revisions"}],"predecessor-version":[{"id":4547,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/3027\/revisions\/4547"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/media\/96"}],"wp:attachment":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/media?parent=3027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/categories?post=3027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/tags?post=3027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}