Listing Rules for New Companies on BSE /IPO Rules

The following eligibility criteria have been prescribed for the companies seeking permission to get listed on the stock exchange, effective August 1st 2006.

The companies are classified into two categories: Large Cap and Small Cap. A company is treated as a large cap company if the issue size is greater than or equal to Rs 10 crore and Market capitalization of not less than Rs 25 crore.

a)    In case of Large Cap Companies

• The minimum post-issue paid-up capital of the applicant company shall be Rs. 3 crore.
• The minimum issue size shall be Rs. 10 crore; and
• The minimum market capitalization of the Company shall be Rs. 25 crore (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price). 

Authorized capital is the amount for which a company has got the authorization from the regulatory body to raise through the issue. A company may or may not want to raise the full amount of authorized capital. Issue size is the amount that a company wants to raise funds through the issue. It’s always less than or equal to authorized capital.

Part payment facility may be available for the investors who want to subscribe to an issue. Post-issue paid-up capital is the value of subscriptions (including promoter’s holding) paid at the end of issue date. This will be less than issue size if the total subscriptions are less than the offered shares or when there is part payment facility available for the issue.

Market capitalization is the product of number of shares outstanding (including promoter’s holding) and the market price. In an IPO before the first day of listing the market price is the issue price.

b)    In respect of Small Cap Companies

• The minimum post-issue paid-up capital of the Company shall be Rs. 3 crore
• The minimum issue size shall be Rs. 3 crore
• The minimum market capitalization of the Company shall be Rs. 5 crore (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price)
• The minimum income/turnover of the Company shall be Rs. 3 crore in each of the preceding three 12-months period
• The minimum number of public shareholders after the issue shall be 1000.
• A due diligence study may be conducted by an independent team of Chartered Accountants or Merchant Bankers (Investment Bankers) appointed by BSE, the cost of which will be borne by the company. The requirement of a due diligence study may be waived if a financial institution or a scheduled commercial bank has appraised the project in the preceding 12 months. 

In addition to this, the issuer company should have a post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs 20 crore.

c)    For all companies

• In respect of the requirement of paid-up capital and market capitalization, the issuers shall be required to include in the disclaimer clause forming a part of the offer document that in the event of the market capitalization (product of issue price and the post issue number of shares) requirement of BSE not being met, the securities of the issuer would not be listed on BSE.
• The applicant, promoters and/or group companies, shall not be in default in compliance of the listing agreement.
• The above eligibility criteria would be in addition to the conditions prescribed under SEBI (Disclosure and Investor Protection) Guidelines, 2000. 

The above classification is only for the purpose of listing.

Note: The rules are taken from BSE website.

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Sathish Emmadi

Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.

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