Sebi board approves stricter rules for SME market, including financial stability before IPOs
SME IPO market, improve the quality of listings and protect investors' interest.
These new rules aim to address concerns around transparency, governance, and the misuse of funds in the booming SME segment.
Under the new norms approved by Sebi, companies seeking to list on the SME exchanges need to show an operating profit of Rs 1 crore in at least two of the last three financial years.
This move will ensure that only financially stable and credible businesses enter the market. Additionally, selling shareholders will now be restricted from offloading more than 50% of their holdings during the IPO.
Sebi has also clamped down on the use of IPO proceeds. Companies can no longer use funds to repay loans taken from promoters, directors, or related parties. This is aimed at stopping any misuse of funds and ensure the capital raised is used for the intended purposes.
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