Once an SME is listed on the SME Exchange (BSE SME or NSE Emerge), it is subject to regulatory supervision by the market regulator SEBI and the respective SME Exchange. Find out the key post-listing compliance norms for SMEs laid down by SEBI and the SME Exchange.
Some of the important post-listing regulatory norms for SME IPOs include filing of annual reports, company’s shareholder structure, corporate governance report, change in company name, and a lot more. These norms are designed to maintain transparency and protect investors’ interests.
Here is a list of the quarterly, half-yearly, annual, and event-based compliance standards that SMEs adhere to;
Quarterly Post-listing Compliance for SMEs
SMEs have to submit the share capital audit report and grievance mechanism to the SME exchange on a quarterly basis. Here are the quarterly compliance requirements explained in detial;
1. Reconciliation of share capital audit report
The share capital review report contains details of the company’s total issued and listed capital, changes in share capital (if any), and the approval in principle granted by the stock exchange. The quarterly share capital reconciliation report must be submitted to SEBI and the SME Board within 30 days of the end of the quarter.
2. Investors Grievance Redressal mechanism
To protect investors’ interests, SEBI’s Investor Grievance Redressal Mechanism Regulations mandated that all listed entities to establish a right grievance redressal mechanism in place.
In this regard, listed SMEs have to report a number of investors' complaints along with solved, pending, and unresolved complaints to the exchange. SME shall file these details within 21 days from the end of every quarterly period.
Half-yearly Post-listing Compliance for SMEs
SMEs have to file their financial results, shareholding structure, and other details on every half-yearly basis.
1.Submission of Half-yearly financial results
Every listed SME must submit its audited quarterly results to the respective stock exchange on which the SME shares are listed.SMEs must submit their half-yearly results, including the profit and loss account, balance sheet, and cash flow statement, within 45 days of the end of each half-year.
2. Statement of deviation in proceeds from SME IPO
As per Section 32(8) of the SEBI Listing Regulations and Disclosure Requirements Regulations 2015, every listed SME company is required to report any deviation in the utilization of IPO proceeds from the targets stated in the IPO offer documents. The deviation declaration must be submitted within 45 days from the end of the relevant half-year period.
3. SME’s Shareholding pattern
SMEs must disclose their shareholding structure every six months. The shareholding structure includes information on the promoters, public shareholdings and, if applicable, changes in the company’s shareholders. The shareholding structure of SMEs should be reported to RoC, SEBI and SME Exchange within 21 days of the end of the half year.
Annual Post-Listing Compliance Norms for SMEs
Both the mainline and SME companies are required to submit their annual report and financial results to the relevant exchange, where its securities are listed.
1. Submission of Financial Results and Annual Reports
Every listed SME company has to submit its annual financial results including balance sheet, P&L, and cash flow statement to the SME exchange within 60 days from the end of the financial years.
Also, the annual reports to be submitted before the day, when it is dispatched to send to company shareholders. It must be an audited report and also include a statement of auditor’s qualification, if any.
SEBI’s rules also requires SMEs to provide their corporate governance report along with the annual report.
Event-based compliance norms for SMEs
There are some specific events for which SMEs must send certain reports to the SME Exchange. Here are the event-related compliance requirements for SMEs;
1. Appointment of Share Transfer Agent
As per the Listing and Disclosure Regulations of SEBI, once an SME has entered into an agreement with the Registrar and Transfer Agent (RTA), it is required to notify the stock exchange regulator, SEBI, and the stock exchanges of the appointment of a share transfer agent.
2. In-principal approval
Prior to the issuance of securities, SMEs are required to provide in-principle approval from the exchange to SEBI.
3. Intimation of Board Meeting
SME has to provide the prior intimation of the board meeting for the financial results. The intimation should be provided at least 5 days in advance excluding the date of intimation and the date of the board meeting.
Further, in case of any events like shares buyback, dividend announcement, voluntary delisting, issue of bonus shares, etc., intimation of board meeting must be sent at least 2 days in advance.
In case of alteration in the nature of securities, such board meeting intimation should be sent at least 11 working days in 4. advance.
4. Shareholding pattern
As per SEBI Listing and Disclosure Regulations 31(1)(a), companies are required to submit a shareholding pattern day before listing of shares. Further, any change in capital restructuring exceeding 2% has to be notified with in 10 days.
5. Loss of share certificate
In case of loss of share certification and the issue of a duplicate certificate, the exchange must be reported within 2 days of getting the information.
6. Record date
42(2) – SMEs should notify the Exchange of the date for closing the transfer books at least 7 working days in advance. In addition, 42(3) requires SMEs to notify the exchange of the record date for dividends and bonuses at least 5 working days in advance.
7. Voting results by shareholders.
The results of shareholders voting should be reported to authorities within 2 working days of the board meeting conclusion.
Change in business name
If there is any change in the name of the listed SME entity, prior approval should be received before filing the name change request with RoC.
Wrapping up
All listed SMEs need to comply with SEBI regulations to maintain investor confidence. The compliance requirements mandate SMEs to report the exchange of their annual reports, corporate governance structure, material changes in capital structure, shareholding structure, etc. within a stipulated time frame. Failure to comply with these regulations can damage the company's reputation.
