Migration To Main Board By SMEs Exchange

The SME can migrate to the main board of the exchange on the condition that certain conditions are met. After the SME platform migrated to the main board, SMEs had better rechecked their shares and were offered returns to investors. In this article, we will discuss the relevant provisions of the SEBI (LODR) Regulations 2015, SEBI (ICDR) Regulations, 2018, and the Companies Act 2013, regarding migration from SME platforms to the main board of the issuer.

A minimum of 1.00 lakh investment is required on the SME platform, while there is no such limit on the main board. Overall, all these companies have given very good returns on both platforms. Further, as there is no investment mechanism to require investment of Rs 1 lakh or more in the main board on SME platforms and this has encouraged and attracted small investors towards SME companies. After migration, small investors have turned to these companies because they are more in the news.

SEBI (ICDR) Regulations, 2018

Certainly, you will be aware of the fact that a company which is unable to meet the conditions laid down under Chapter II of SEBI (ICDR) Regulations 2018, will be required to list its equity shares on the main board for listing its shares. Can achieve The provisions given under Chap IX of the SEBI (ICDR) ICDR Regulations, 2018.

Further, if the company wishes to list its equity shares in the main board, it may do so as per SEBI Regulations (Listing and Disclosure Requirements) Regulations, 2015..

SEBI (LEDR) Regulations, 2015

The company issuing face value of equity shares of more than Rs 10 crore and up to Rs 25 crore can voluntarily go to the main board, provided the shareholders approval is obtained by passing a special resolution through postal ballot.

It may be noted that the special resolution will be considered valid only if the votes cast by non-promoters in favour of the resolution by non-promoters receive twice as many votes as the resolution.

Norms for Migration To Main Board By SMEs Exchange

The stock exchange has issued a migration policy and has specified certain norms for migration from SMEs to the main board. Any company paying more than 10 crore capital on the SME platform can apply to migrate to the main board provided:

• The market capitalisation is a minimum of Rs 25 crore.

• A special resolution is passed at the annual general meeting, where at least two-thirds of the shareholders (other than the promoter shareholders) favour the stay.

• On migrating the main board, the company is required to comply with SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

• The company / director / promoter is not controversial by SEBI.

• The applicant should be listed on the SME platform for a minimum period of 2 years.

• No disciplinary action should be taken by other stock exchanges and regulatory authorities in the last three years. No material, regulatory or disciplinary action should be taken against the applicant company by the stock exchange or regulatory authority in the last three years. No material, regulatory or disciplinary action should be taken by the Stock Exchange or Regulatory Authority in the last one year in relation to promoters / promoters of promoter / companies, group companies, promoters / companies, promoters / companies.

• Certificate in respect to:: 

1. The company has not been sent to the board for industrial and financial reconstruction.

2. The net worth of the company is wiped out of accumulated losses due to net worth.

3. The company has not received a petition accepted by the court.

Procedure for Migration from SME Exchange

The procedure for migration from SME exchange are as follows:

• Obtain prior consent of Scrutinizer.

• To appoint an agency for the purpose of e-voting.

• Set the cut-off data to send notice to shareholders.

• Finalise the calendar of events.

• Tell the concerned stock exchange in advance about the board meeting.

• Conduct a board meeting and approve the appointment of the Scrutiniser and also approve the notice for the postal ballot.

• Print information for the postal ballot.

• Send the notice of postal ballot with ballot paper and explanatory details.

• Publish an advertisement in a local and an English newspaper and include the following details:

1. Date of notice of ERM.

2. Polling initiation data (if polling is conducted via electronic mode, the provision of Rule 20 of the Company Rules shall apply mutation mutation).

3. Voting deadline

4. Statement that any postal ballot arriving after 30 days from the date of sending the EGM notice will be considered invalid.

5. If the members do not receive the postal ballot, the details company also has the provision to apply to get a duplicate copy of the same.

6. Details of person for redressal of grievances.

• Postal ballot or e-voting system.

• Scrutiny should declare the result as soon as possible after the last date of receipt of the ballot, but it should not be more than 7 days later.

• File from MGT-14 of the respective companies in 30 days from the date of declaration of results by Scrutiny.

• Upload the result to the company's website.

• Submit the result along with the application form for in-principle approval to the concerned stock exchange.

Conclusion

To ensure easy migration from SMEs to the main board, the due process needs to be followed. After the migration from the SME platform to the main board, retail participation in the companies has been seen to be increasing at a fixed ratio, which has helped the performance of the stocks of SME companies.