What is SME exchange? what it's benefit of listing on SME exchange

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Nandu asked over 2 years ago

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4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

> What is SME exchange? what it's benefit of listing on SME exchange -- **What is SME exchange** --The SME platform of NSE is a new exciting platform for small and medium sized companies with high growth potential. The NSE platform has strong relationships with leading Institutions like SBI, IDBI Bank & SIDBI as platform partners. The SME platform of NSE would be open for SMEs whose post issue paid up capital shall be less than or equal to Rs. 25 crores. The platform is expected to offer a new and alternate asset asset class to informed investors having longer investment horizon. The platform shall allow new, early stage ventures and small quality companies to raise much needed growth capital as they grow, mature and transit to NSE’s main board. This platform is being founded on the following 4 cornerstone pillars of Credibility, Transparency, Liquidity & Growth. **--What it's benefit of listing on SME exchange** -- The SME companies would derive several benefits from listing on the SME platform: Access to growth Capital : with opportunities to raise capital for meeting growth requirements Exit to existing investors : Early stage investors in the companies including angel and VC investors can be provided exit through listing on SME platform. Wider shareholder base : The companies shares would be held by a wider base of shareholders resulting in liquidity. Employee incentives : Listing would enable SME companies to provide stock based incentives to their key employees thus improving their retention. Higher profile and visibility : Improved visibility of the SMEs listed on the SME board would improve credibility with its various stakeholders including clients, suppliers, financiers, etc. Higher Corporate Governance : The listed SMEs would also be guided to adopt higher corporate governance standards which would help them in their jouney to the main board. Seamless path to the main Board : The platform would provide a seamless path to the prestigious main board of the NSE as they grow in operations and size

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered over 2 years ago

An SME Exchange is a stock exchange dedicated for trading the shares / securities of SMEs who otherwise find it difficult to get listed on the Main Board.Easy access to Capital BSE SME provides an avenue to raise capital through equity infusion for growth oriented SME’s Benifits: Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund new projects / undertake expansions / diversifications and for acquisitions. This mode of fund raising through infusion of equity can help the Companies to raise borrowed funds at efficient rate. Equity financing lowers the debt burden leading to lower financing costs and healthier balance sheets for the firms. Listing also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees. SME Listing channelizes meaningful Schemes. Listing pre supposes good Corporate Governance which results in sustainability of the Company. Listing also helps generate an independent valuation of the company by the market. Listing raises a company's public profile with customers, suppliers, investors, financial institutions and the media.

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Open uri20170510 32134 1c996lj?1494421732 Anil answered over 2 years ago

An SME Exchange is a stock exchange dedicated for trading the shares / securities of SMEs who otherwise find it difficult to get listed on the Main Board.Easy access to Capital BSE SME provides an avenue to raise capital through equity infusion for growth oriented SME’s. Enhanced Visibility and Prestige The SME’s benefit by greater credibility and enhanced financial status leading to demand in the company’s shares and higher valuation of the company. Encourages Growth of SMEs Equity financing provides growth opportunities like expansion, mergers and acquisitions thus being a cost effective and tax efficient mode. Ensures Tax Benefits In case of listed securities Short Term Gains Tax is 15% and there is absolutely no Long Term Capital Gains Tax. Enables Liquidity for Shareholders Equity financing enables liquidity for shareholders, provides growth opportunities like expansion, mergers and acquisitions, thus being a cost effective and tax efficient mode. Equity financing through Venture Capital Provides an incentive for Venture Capital Funds by creating an Exit Route and thus reducing their lock in period. Efficient Risk Distribution Capital Markets ensure that the capital flows to its best uses and that riskier activities with higher payoffs are funded. Employee Incentives Employee Stock Options ensures stronger employee commitment, participation and recruitment incentive

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 chandana.G answered over 2 years ago

**Benifits**: Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund new projects / undertake expansions / diversifications and for acquisitions. This mode of fund raising through infusion of equity can help the Companies to raise borrowed funds at efficient rate. Equity financing lowers the debt burden leading to lower financing costs and healthier balance sheets for the firms. Listing also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees. SME Listing channelizes meaningful Schemes. Listing pre supposes good Corporate Governance which results in sustainability of the Company. Listing also helps generate an independent valuation of the company by the market. Listing raises a company's public profile with customers, suppliers, investors, financial institutions and the media. A listed company is typically covered in analyst reports and may also be included in one or more of indices of the stock exchanges. An initial listing increases a company's ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutions and in the process attract a wide and varied body of institutional and professional investors. Listing leads to better and timely disclosures and thus also protects the interest of the investors. Listing provides a continuing liquidity to the shareholders of the entity. This in turn helps broaden the shareholder base. Listed companies generally find that the market perception of their financial and business strength is enhanced. Tax Benefits - The sale of unlisted shares in short term attract the capital gain tax upto 30% as applicable to the tax payer and the long term capital gain tax of 10% without indexation and 20% with indexation. The sale of listed securities in the short term attract the capital gain tax of 15% and there is no long term capital gains tax provided it has been subject to STT. This makes it clear that the listing of shares on SME is very attractive. All Companies listed on SME Exchange can anytime migrate to the main Board of BSE provided shareholders approval is accorded.

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