Nimesh Dhulla

#NSE Tightens Migration Rules For #SMEs To Main Board The National Stock Exchange on Thursday introduced stricter requirements for small and medium enterprises seeking to migrate from its #SME platform to the main board, establishing a minimum revenue threshold of Rs 100 crore in the previous #financial year for the first time. The #exchange has also significantly increased the average #equity capitalisation requirement to Rs 100 crore from the previous Rs 25 crore. Additionally, #promoters and promoter groups must maintain at least 20 percent #shareholding when applying for migration, and their holdings must not fall below 50 percent of their shares held on the listing date. These heightened regulations follow recent allegations of funds misappropriation by Gensol Engineering, which migrated from BSE's SME platform to the NSE main board in 2023. The changes also come shortly after #SEBI implemented a comprehensive overhaul of SME regulations. Under the new framework, small companies must demonstrate positive operating profit for at least two out of three financial years. This replaces the existing requirement of positive EBITDA for the previous three years and profit after tax for only the most recent financial year. These new regulations will take effect from May 1. The exchange has reduced the public shareholder requirement to 500 on the application date, down from the current mandate of 1,000 public shareholders as of the last day of the preceding quarter from the application date. Several key requirements remain unchanged, including the three-year listing period mandate, minimum net worth of Rs 75 crore, and minimum paid-up equity capital of Rs 10 crore. SMEs will still need to observe a cooling period of 60 days from when their security is released from any surveillance action by exchanges. Companies or their promoters must not have any proceedings against them under the Insolvency and Bankruptcy Code or winding-up petitions admitted by NCLT/IBC. There should be no material regulatory action against the company within the past three years. Furthermore, companies must have no defaults in interest or principal payments, no pending investor complaints in SCORES, and no debarment of the SME, promoter, or subsidiary companies by SEBI.