Mumbai: The Securities and Exchange Board of India or Sebi, on Tuesday, relaxed the norms for listing of small and medium cap enterprises or SMEs on stock exchanges. The regulator allowed SMEs to fix the minimum lot size of their initial public offer or IPO shares according to the price band of the offer. For instance, an IPO with a price of up to Rs 14 a share, the minimum lot size will be 10,000, for a price band above Rs 14 but less than Rs 18 the lot size will be 8000, for a price band above Rs 750 and below Rs 1000 the lot size will be 160, for a price band above Rs 1000 the lot size will be 100 and so on.
A company with a capital base of less than Rs. 10 crore is allowed to be listed on the SME exchange with easier listing norms. There are at least
26 million SMEs in India. In May last year, Sebi allowed Bombay Stock Exchange and National Stock Exchange to launch exchanges dedicated to SMEs but neither of them has so far started one. On the SME exchange, the minimum contract size was Rs 1 lakh. One of the primary roadblocks to launch an SME exchange was the lot size, which Sebi has relaxed now.
A market maker is to buy the entire shareholding of an individual shareholder in one lot if the value of such shareholding is less than the minimum contract size.
According to the new norms, at the IPO stage if the price band decided, falls within two different price bands, the minimum lot size will be based on the price band in which the higher price falls into.
The lot size cannot be reduced below the initial lot size if the trading price is below the IPO issue price, but the stock exchanges can review the lot size once in every six months. The lot size will be the same for securities traded across the exchanges. In case of oversubscription, if the option to retain 10% of the net offer to public for the purpose of making allotment in minimum lots is exercised, then it has to be ensured that post issue paid up capital of the issuer does not go beyond Rs 25 crore, Sebi said.