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Wealth & Treasury Management

SME IPO Advisory

SME IPO Advisory

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Regulatory Framework

SME IPO eligibility for listing on the BSE SME or NSE Emerge platforms is governed by Chapter IX of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("ICDR Regulations").

Under Regulation 229, an issuer is eligible for the SME platform where post-issue paid-up capital does not exceed ₹10 crore; issuers with post-issue paid-up capital between ₹10 crore and ₹25 crore may also opt for the SME route rather than the mainboard. Regulation 236 requires promoters to hold a minimum contribution of 20% of post-issue capital, subject to a lock-in of 3 years for that minimum contribution. Track-record requirements generally call for at least 3 years of operations (or promoters with equivalent experience in a similar line of business); the SEBI (ICDR) Amendment Regulations, 2025 additionally introduced a profitability screen requiring operating profit (EBITDA) of at least ₹1 crore in at least 2 of the preceding 3 financial years.

The two SME platforms are not identical in their additional criteria: NSE Emerge requires positive Free Cash Flow to Equity in at least 2 of the preceding 3 years, a condition BSE SME does not separately impose.

We position SME IPO advisory as listing-readiness and process support — corporate restructuring, financial and disclosure preparation, merchant banker and market-maker coordination — rather than as an IPO underwriting or fundraising guarantee, and confirm each client's numbers against these current thresholds before beginning readiness work, given that the profitability screen was only introduced in 2025.

Overview

SME IPO advisory covers the initial public offering of a small and medium enterprise on the SME platforms of the stock exchanges under the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 and the SME listing framework — the readiness assessment, the financial restatement and the governance, the preparation of the offer documents, the SEBI filing and the comments, the listing on the SME platform, and the post-issue compliance. The SME IPO is the scaled-down public offering for the growing small enterprises, with the lighter eligibility and the faster process of the SME framework.

The SME IPO is the growth capital event for the small enterprise that is ready for the public market — the eligibility under the SME framework, the financials restated and the governance built, the offer document filed with the SEBI and the exchange, and the listing on the SME platform. The process is shorter and the thresholds are lower than the main-board IPO, but the disclosure and the compliance discipline is the same.

The cost of an unprepared SME IPO is the failed or the delayed issue: the SEBI comments that expose the gaps, the offer that the market does not subscribe, the post-listing compliance that the company was not built for.

This service is for SMEs planning an IPO. We assess the readiness under the SME framework and the ICDR Regulations 2018, prepare the company — the financials, the governance, the policies — build the offer documents and the restated financials, support the SEBI and the exchange filing, manage the listing and the allotment, and build the post-issue compliance so the SME's public life starts cleanly.

How It Works

  1. 1

    SME IPO Readiness

    We assess the readiness under the SME framework and the ICDR Regulations.

    Harun Raaj & Associates does this2-4 weeks
  2. 2

    Financials & Governance

    We restate the financials and build the governance.

    Harun Raaj & Associates does this6-12 weeks
  3. 3

    Offer Documents

    We build the offer documents with the disclosures.

    Harun Raaj & Associates does this3-6 weeks
  4. 4

    SEBI & Exchange Filing

    We manage the SEBI and the exchange filing and the comments.

    Harun Raaj & Associates does this6-12 weeks
  5. 5

    Listing & Post-Issue

    We manage the listing and build the post-issue compliance.

    Harun Raaj & Associates does thisOngoing

Frequently Asked Questions

What are the minimum eligibility requirements for a company to list on the NSE Emerge or BSE SME platform?
Under Regulation 229 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 (ICDR Regulations), a company seeking listing on an SME exchange must have a post-issue paid-up capital not exceeding Rs 25 crore. The company must have been incorporated for at least two years and must have distributable profits in two of the preceding three financial years, or must have a net tangible asset value of at least Rs 3 crore in each of the preceding three years per Regulation 229(2). Track record requirements include a minimum of three years of operations under the same management, and the company must have a positive net worth. NSE Emerge additionally requires that the applicant company must not have been referred to NCLT or wound up proceedings under the Insolvency and Bankruptcy Code 2016.
How many shareholders are required after an SME IPO and what is the minimum application size?
Under Regulation 253 of the SEBI ICDR Regulations 2018, an SME IPO must result in at least 50 allottees post-issue, which is considerably lower than the 1,000-allottee minimum for a mainboard IPO. The minimum application and trading lot size for SME IPOs is Rs 1,00,000 (one lakh rupees) per Regulation 244(1)(c), making SME IPOs accessible only to a narrower investor base compared to mainboard issues. The issue must be underwritten 100%, with the merchant banker underwriting at least 15% of the total issue size on its own books as per Regulation 246(1). Allocation methodology follows a proportionate basis for Non-Institutional Investors and Retail Individual Investors, with no separate QIB category unless the issue exceeds a threshold.
What financial statements and auditor certificates are required in the SME IPO prospectus?
The Draft Red Herring Prospectus (DRHP) for an SME IPO must include audited financial statements for the last three financial years prepared under Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules 2015, or IGAAP if the company is below the Ind AS threshold. An accountant's report as specified in Schedule VI of the SEBI ICDR Regulations 2018 must be included, certified by the statutory auditor who must be a peer-reviewed CA firm empanelled with the Institute of Chartered Accountants of India. If the last audited financials are more than six months old at the date of filing, limited-reviewed stub period financials must be included under Regulation 26(4). A certificate on the statement of tax benefits available to the company and its shareholders under applicable provisions of the Income Tax Act 1961 must also be included.
What are the ongoing compliance requirements after listing on an SME exchange?
Post-listing, an SME company must comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (LODR), albeit with relaxed requirements under Regulation 15(2), which exempts SME-listed companies from several provisions applicable to mainboard companies, including mandatory formation of a nomination and remuneration committee and a stakeholders' relationship committee. Half-yearly financial results (not quarterly) must be submitted to the stock exchange under Regulation 33(3)(b) within 60 days of the half-year end. Continuous disclosures of material events under Regulation 30, insider trading compliance under the SEBI (Prohibition of Insider Trading) Regulations 2015, and annual report submission within 21 days of the AGM under Regulation 34 remain fully applicable. Migration to the mainboard is compulsory once paid-up capital exceeds Rs 25 crore, triggering full LODR compliance.
Can an SME company use IPO proceeds for general corporate purposes, and is there a cap?
Under Regulation 7(1)(e) of the SEBI ICDR Regulations 2018, proceeds from an SME IPO may be utilised for general corporate purposes, but the amount so allocated cannot exceed 25% of the total amount raised in the issue. All utilisation of IPO proceeds must be in accordance with the objects of the issue as stated in the prospectus, and any deviation requires prior approval of shareholders by a special resolution and disclosure to the stock exchange under Regulation 32(4) of the SEBI LODR Regulations 2015. The company must appoint a monitoring agency (typically a scheduled commercial bank or a public financial institution) if the issue size exceeds Rs 100 crore under Regulation 41 of the SEBI ICDR Regulations 2018. Quarterly monitoring reports on fund utilisation must be submitted to the audit committee and the stock exchange.

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