| Eligibility / Condition | Details (ICDR references) |
|---|---|
| Post-Issue Paid-Up Capital Requirement |
Issuer shall be eligible if Post-Issue Paid-Up Capital is more than ₹10 crore. Issuers with more than ₹10 crore and less than or up to ₹25 crore may also issue under Chapter IX. |
| Track Record / Existence | The Issuer must satisfy Track Record (and other eligibility) required by the SME Exchange where it proposes to list. The restated financials of predecessor (partnership/LLP/division, if any) may be considered subject to strict restatement & auditor peer-review conditions. |
| Minimum Operating Profit | The Issuer may make SME IPO only if it had minimum Operating Profits (EBITDA) of ₹1 crore from operations for at least 2 out of the 3 previous financial years. |
| Existence after Conversion (from Proprietorship / Partnership → Company) | If converted from proprietorship/partnership/LLP, the Company must have been in existence for at least one full financial year before filing the DRHP on the SME Exchange. Restated financials must follow Schedule III format (Companies Act, 2013) and be audited accordingly. |
| Changes in Promoters / New Promoters | If there is a complete change of promoters or new promoters acquire more than 50% shareholding, the Issuer may file DRHP only after completion of one full calendar year from the date of such changes. |
| Dematerialisation Requirement | All specified securities held by promoters, promoter group, selling shareholders, directors, KMP, senior management, QIBs, employees, SR-shareholders, regulated entities, and any other board-specified categories must be in dematerialised form prior to filing of DRHP. |
| Application for In-Principle Approval, Listing / Depository Agreement | The Issuer must have applied for In-Principle Approval to SME exchange(s) and entered into an agreement with a depository for dematerialisation prior to filing of DRHP / Offer Document. |
| Firm arrangements of finance for Project Funding | The Issuer must have firm (verifiable) arrangements of finance for at least 75% of the stated means of finance for any specific project funded from the issue proceeds (excluding the amount to be raised through the public issue or internal accruals). |
| Limits on general corporate purpose / Unspecified Acquisitions |
Amount raised for General Corporate Purposes in the offer document shall not exceed 15% of amount being raised or ₹10 crore, whichever is less. If certain objects are unidentified, limits (typically up to 35% with further conditions) apply. |
| Holding Period for Offer-for-Sale (OFS) Shares | Only fully paid equity shares held for at least one year prior to filing the Draft Offer Document are eligible to be offered for sale, subject to specified exceptions (e.g., certain government/SPVs, High Court/Tribunal scheme shares, qualifying bonus shares, etc.). |
| OFS limits for certain SME offers (reg 8A / 6(2) route) |
For issues filed under the Book-Building route where at least 75% of net offer is reserved for QIBs, specific caps apply: • Sellers holding less than 20% pre-issue cannot sell more than 50% of their pre-issue holding. • Sellers holding more than 20% cannot sell more than 10% of pre-issue holding. Calculations are as on the date of filing of the draft offer document; lock-in rules apply. |
| Minimum promoters’ contribution (MPC) | Promoters must bring in at least 20% of the post-issue capital as Minimum Promoter Contribution. Shortfall in MPC allowed under specific provisos (e.g., certain non-promoter institutional investors can bridge up to 10% without becoming promoters). MPC must be in place one day prior to opening of issue. |
| Securities Ineligible for MPC | Securities acquired in preceding periods by non-cash means, pledged securities, or securities acquired at a price lower than issue price in preceding 1–3 years (subject to conditions) are ineligible for computing MPC (with certain exceptions). |
| Lock-in of promoters’ contribution | MPC (minimum 20%) is locked-in for 3 years from date of allotment. Promoters’ holdings in excess of MPC are locked-in for 2 years; 50% of the remaining from MPC is locked-in for 1 year, and 50% of the remaining for another 1 year (as per applicable granular lock-in rules). |
| Ineligibility grounds (Debarments / Willful Defaulters / Fugitive Offenders) | Issuer (and promoters/promoter group/directors/selling shareholders) are ineligible if debarred from capital markets, categorized as willful defaulter / fraudulent borrower, or if any promoter/director is a fugitive economic offender. |
| Minimum Operating Profit requirement (format/period) | Operating profit (EBITDA) requirement is computed on the restated and consolidated basis as applicable. If a predecessor entity is used, restatements & disclosures per Schedule III are required; detailed auditor certifications are required. |
| Minimum Number of Allottees / Allotment condition | SME allotment rules: the allotment shall not be made unless there are at least 200 allottees. |
| Restriction on subsequent Issues (Pre-Listing) | From filing of DRHP until listing, the Issuer shall not make any further issue (Public / Rights / Preferential / QIP / Bonus) except ESOS / Stock Appreciation Rights. |
| Migration provisions (SME ⇄ Main Board) |
SME Issuers with post-issue paid-up capital more than ₹10 crore and less than or up to ₹25 crore can migrate to Main Board if main-board eligibility is met and shareholders approve by special resolution with non-promoter voting thresholds. Listed main-board issuers with post-issue paid-up capital less than ₹25 crore may migrate to SME Exchange if they meet SME exchange listing eligibility criteria. |
| Due-Diligence / Offer document visibility requirement |
Draft offer document must be filed with SME Exchange(s) and be available to public for comments (hosted on issuer / exchange / lead manager websites) for at least 21 days. The Lead Manager must submit a Due-Diligence Certificate and Site Visit Report to the SME exchange. |
| Monitoring Agency requirement (for large issue size) | If the proceeds of the issue exceed ₹50 crore, the Issuer must appoint a Monitoring Agency (credit rating agency registered with SEBI) to monitor the use of proceeds and submit periodic reports. |
| Other SME Exchange(s) specific conditions | Chapter IX of the SEBI ICDR Regulations, 2018, refers issuers to the SME exchange’s own eligibility rules for exchange-level additional eligibility conditions. Make sure to check the chosen exchange rules in addition to Chapter IX. |
🧾 SME IPO Eligibility Checklist – SEBI ICDR (Chapter IX) vs NSE Emerge vs BSE SME
| Parameter / Criteria | SEBI ICDR Regulations (Chapter IX) | NSE Emerge (SME Platform) | BSE SME Platform |
|---|---|---|---|
| Governing Regulation / Source | Chapter IX (Reg. 227–281A) — ICDR Regulations, 2025 | NSE Emerge Eligibility Criteria (nseindia.com) | BSE SME Listing Criteria (bsesme.com) |
| Post-Issue Paid-Up Capital | Post-issue paid-up capital ≤ ₹10 crore. Issuers with >₹10 crore and ≤₹25 crore may also issue under Chapter IX. | Post-issue paid-up capital (face value) ≤ ₹25 crore. | Post-issue paid-up capital ≤ ₹25 crore. |
| Incorporation / Legal Status | Must be a company incorporated under the Companies Act, 2013 / 1956. | Same — must be a company incorporated in India. | Same — company incorporated in India. |
| Track Record of Operations | Company or promoters/promoting entity should have track record as per SME Exchange rules; financials restated per Schedule III where applicable. | Minimum 3 years of track record (issuer / promoters / predecessor entity). | Minimum 3 years of track record; if absent, project must be appraised/funded by financial institutions (NABARD/SIDBI/Banks). |
| Operating Profit Requirement | Minimum operating profit (EBITDA) of ₹1 crore from operations in at least 2 of the 3 preceding financial years. | Same — EBITDA ≥ ₹1 crore in any 2 of 3 years. | Operating profit (EBITDA) positive in at least 2 of last 3 years. |
| Net Worth Requirement | Positive net worth on consolidated basis. | Positive net worth required. | Minimum net worth ₹1 crore for preceding two years. |
| Net Tangible Assets (NTA) | Not specified in SEBI ICDR (Chapter IX). | Not specified. | Minimum ₹3 crore in the preceding financial year. |
| Leverage / Debt-Equity Ratio | Not specified (refer exchange-level rules if any). | Not specified. | Maximum 3:1 (relaxable for finance companies). |
| Conversion from Partnership / LLP | Converted company must exist for at least 1 full financial year before filing DRHP; predecessor’s track record can be considered if restated per Schedule III. | Same condition adopted. | Same condition applies. |
| Change in Promoters / Control | If change >50% in promoters, DRHP filing allowed only after 1 year from such change. | Similar restriction on promoter change before filing. | Similar restriction applies. |
| Dematerialisation | All securities of promoters, directors, KMP, etc. must be in demat form before filing offer document. | 100% promoter shareholding must be in demat form. | Same — all promoter shares must be in demat form. |
| Application to Exchange | In-principle approval from SME exchange required before filing DRHP. | Application to NSE Emerge mandatory prior to DRHP filing. | Application to BSE SME mandatory prior to DRHP filing. |
| Minimum Promoter Contribution (MPC) | Minimum 20% of post-issue capital to be contributed by promoters. | Same — 20% promoter contribution required. | Same — 20% promoter contribution required. |
| Lock-in Period (Promoter Holding) | MPC locked-in for 18 months from allotment; excess promoter holding locked-in for 6 months (extensions may apply for capex projects per SEBI rules). | Same — follows SEBI norms. | Same — follows SEBI norms. |
| Offer for Sale (OFS) Restrictions | OFS limited to 20% of total issue size; selling shareholders cannot sell more than 50% of their pre-issue shareholding (subject to specific caps & regs). | Explicitly mentioned on NSE site — same limits and caps. | Not always explicitly stated on site; generally follows SEBI norms and exchange practice. |
| Use of Proceeds Restrictions | IPO proceeds cannot be used to repay loans from promoters/related parties (SEBI restrictions apply). | Same restriction applies. | Not always explicitly stated on BSE site, but SEBI ICDR restrictions apply. |
| Firm Arrangements of Finance | Must have firm arrangements for at least 75% of project finance (excluding IPO proceeds). | Same condition adopted by NSE. | Same condition followed by BSE. |
| Debarment / Willful Defaulter Check | Issuer / promoters / directors must not be debarred, willful defaulters, fraudulent borrowers, or fugitive economic offenders. | Explicitly required by NSE. | Explicitly required by BSE. |
| Change in Name / Business Activity | If name changed within last 1 year, at least 50% revenue should be from new activity (SEBI guidance / exchange checks). | NSE does not specifically prescribe this in general guidance (refer exchange details). | Explicitly required by BSE SME — disclose and meet conditions. |
| Minimum Number of Allottees | Minimum 200 allottees required for SME IPO. | Same — minimum 200 allottees. | Same — minimum 200 allottees. |
| Minimum Application Size | Typically ₹1 lakh per investor subject to 2 lots (subject to exchange rules). | ₹1 lakh per application subject to 2 lots. | ₹1 lakh per application subject to 2 lots. |
| Market Making Requirement | Mandatory market making for 3 years post-listing (SEBI Chapter IX requirement). | Same — 3-year market making compulsory on NSE Emerge. | Same — 3-year market making compulsory on BSE SME. |
| Migration Clause | SME company can migrate to Main Board when paid-up capital exceeds ₹25 crore and main board criteria are met (shareholder approvals, etc.). | Provision available as per SEBI & NSE rules. | Provision available as per SEBI & BSE rules. |
| Firm Allotment / QIB Reservation | If applicable, allocation structure follows SEBI — e.g., retail / HNI / QIB splits as per the offer specifics (subject to SME allocation rules). | Same as per SEBI / NSE allocation rules. | Same as per SEBI / BSE allocation rules. |
| Cooling-Off Period (after rejection/withdrawal) | Not specified in ICDR (refer exchange for practice). | Not specifically mentioned in general guidance. | BSE specifies a minimum 6 months gap before re-filing in certain cases. |
| Monitoring Agency | Required if issue size > ₹50 crore (appoint monitoring agency registered with SEBI). | Same — as per SEBI rules. | Same — as per SEBI rules. |
| Corporate Governance Compliance | As per SEBI (LODR) post-listing obligations; SMEs have certain tailored compliance requirements. | NSE Emerge follows LODR (SME chapter) and exchange-level compliance. | BSE SME follows LODR (SME chapter) and exchange-level compliance. |
| Statutory Due Diligence | Merchant banker must certify due diligence; DRHP displayed on exchange for public comments (and linked as required). | Mandatory before NSE approval — due diligence & disclosures required. | Mandatory before BSE approval — due diligence & disclosures required. |
| Note: This table summarises typical provisions of SEBI ICDR Chapter IX and commonly published exchange-level conditions (NSE Emerge & BSE SME). Always cross-check the specific and latest exchange rules and SEBI regulations before relying on this for compliance or advisory purposes. | |||