BSE listing – Route to business expansion

Did you ever think? Why is BSE listing important for a company? Why companies list themselves in the Bombay Stock Exchange? In this blog, we will know three things that you should know about the Bombay Stock Exchange listing before listing your company to Bombay stock exchange.

What’s in it for me?

Bombay Stock Exchange or BSE is an Indian stock exchange at Dalal Street in Mumbai, India. It was established in 1985.

Mr. Premchand Roychand was a founding member of the Bombay stock exchange. The Bombay stock exchange is Asia’s oldest stock exchange and 10th largest stock exchange body globally.

What is BSE listing?

The Bombay stock exchange is a securities market Index. Generally, companies list themselves in BSE to generate funds for their business and grow their company.

When a company plans to issue Initial Public Offering (IPO), they list themself in the Bombay stock exchange. Now you must be thinking, what is IPO?

The Initial Public Offering (IPO) is a process where a company offers its share to the institutional investors, retail investors, public. The company issue shares to the public and provides them ownership of the company.

Therefore through the Initial Public offering, the company lists its name in the stock market. BSE listing companies allow the market to trade with their shares.

Why list on BSE?

To run a business, a company needs capital. In the earlier stage, a company raises funds by approaching friends, family, or relatives.

Then in the next stage, when a business has started, and the company requires more funds to operate in the marketing, angel investors help them run the company.

Angel investors are the businesses and entrepreneurs which improve and help companies in their business. However, these investors take some equity of the company.

Finally, the company is established and looking for more growth.

This is the situation where BSE listing enters. By listing the company in the Bombay stock exchange, a company will start to grow more. A company is now eligible to raise funds by issuing shares.

By initial public offering (IPO), a company allots shares to the public after it is ready to list in the BSE and NSE.

BSE listing helps a company to raise capital. The leveraging ratios get more attractive, and the capacity to raise debt increases.

Other than this, when a company lists in Bombay stock exchange, it enhances the visibility and credibility of the company. A company gets a broader capital base and an increase in working capital.

Moreover, a company can raise funds at low rates and comparatively on relaxed norms by BSE listing.

How to list on BSE?

The Bombay stock exchange has various criteria for different companies in the market.

Let’s start with startups

BSE Startup platform provides a friendly environment to the entrepreneurs and Investors. This platform helps them to list their company in the stock exchange and open for the way of finance for further growth and development.

Bombay stock exchange has a platform called “BSE SME” for small media enterprises and startups. BSE Startup is for new companies that are registered under the Startup India Standup India scheme.

Through the BSE SME platform, startups can avail INR 25 lakhs to INR 1 crore as initial investment by BSE listing.

Terms to list company in BSE SME

• A company should have issued the capital of INR 3 crore minimum after listing in the Bombay stock exchange.
• It should have at least three years of experience with tangible worth INR 3 crore.
• In the case of a new company other than startups, INR 5 is the minimum issued capital for SMEs for BSE listing.
• For high tech startups, no minimum capital, no past records are required for registration and listing process.
• A company should be registered as a limited liability company (public limited) under the committee of the ministry of government.

Listing Criteria for company

• The company should have a website with all the details of the company.
• The minimum application and lot size should not be less than INR 1 lakh.
• 50% of independent directors on the board should agree.
• The company should have a full-time company secretary.
• No ending petition is admitted in court.
• No regulatory cases were pending of the company or its directors.
• The company should not be a part of the Board of Industrial and Financial Reconstruction (BIFR). However, if the company has come out of it, then, in that case, it is eligible for BSE listing.

Migration from BSE SME to the Main Board

When a company settles in the platform, it can migrate to the leading board platforms to compete with giant companies.

Here are some parameters a company should follow to migrate from the BSE SME platform to the Mainboard platform after BSE listing.

• The company should be listed and traded in the BSE SME platform for at least two years.
• At this stage, the company should have a paid-up capital of minimum INR 10 crore or more and market capitalization of INR 25 crore or more.
• Shareholder approval to be sought by special resolution and other eligibility criteria of the main board should be fulfilled.

In the case of underwriting:- 100% underwritten by the underwriter. Under section 106P(2) of Issue of Capital and Disclosure Requirements (ICDR) regulations, at least 15% of the issued size be underwritten by the merchant banker in his account.

Generally, the Marchant banker is the broker who acts as a link between the company and the investors. A Marchant banker knows the necessity of business. He helps to fulfill the financial needs of the company.

Therefore he has the authority to underwrite corporate securities and advice on issues like Merger.

In the case of market-making:- At least 5 market-making people are required three years of market-making. It is mandatory to have the liquidity of shares in the company and a minimum one year from the date of registration.

Let’s discuss

How much will it cost to list a company in BSE?

The capital includes Equity shares, preference shares, fully as well as convertible debentures, Indian depository receipts, etc. In the case of debenture capital listed before 1 April 2017, the fee will be 75% of the below fees.

In the case of Equity segment

• The initial listing fee is INR 20000. After that, if the listed capital is more up to INR 100 crores than INR 2.5 lakhs annually for commonly listed companies and INR 3 lakh for exclusively listed companies.
• Listed capital of a company of INR 100 crores but up to INR 200 crores than INR 3 lakh annually for commonly listed companies and INR 3.25 lakh for exclusively listed companies.
• From the listed capital of INR 200 crores to INR 300 crores, the annual listing fees will be INR 3.75 lakhs.
• Above INR 300 crores but not more than INR 400 crores, the annual listing fees will be INR 4.50 lakhs.
• From INR 400 crores to INR 500 crores, then INR 6 lakhs will be the annual listing fee.

If the listed capital exceeds INR 500 crores to INR 1000 crores, the annual listing fee will be Rs. 6.05 lakhs with additional listing fees of Rs. 3530 for every increase of Rs. 5 crores.

For the listing capital of Rs. 1000 to 2000 Crores than the annual listing fee is 9.90 lakhs with additional fees of Rs—3930 on every increase of Rs. 5 Crores.

In the case where the listed capital exceeds Rs. 2000 to Rs 3000 Crores than the annual listing fee is Rs 10 lakhs + Rs 4270 additional on the increase of every five crores.

Above Rs, 3000 crores listing capital Rs10.20 lakhs is the annual listing fee with addition to Rs 3910 on every increase of Rs 5 Crores.

All the fees are applicable for the full year.

In the case of Private debt securities

The initial listing fee of privately placed debt securities is the same as the equity segment. Rs 20000.

The listing processing fee is applicable only for private companies, which is Rs. 4500 per ISIN and with issued size up to Rs 5 crore is Rs. 2500 per ISIN.

If the issued size is more than Rs 5 crore but up to 10 crores, the annual listing fee is Rs 3750 per ISIN.

If the issue size lies between Rs. 10 Crores to 20 Crores than in that case, Rs 7500 per ISIN.

However, if the issue size is above Rs 20 crores than an additional fee of Rs. 200 for every increase of 1 crore.

In the case of the SME segment

The annual fee is INR 25000 or 0.01% of full market capitalization. Whichever is higher.

In the case of the Mutual Fund segment

In the case of the mutual fund segment, the initial listing fee is nil. The annual listing fee for the tenure of scheme payable every month or part thereof. With the processing fee of Rs. 10000.

• In the case where issued size is up to Rs. 50 crore than Rs 1000 per month.
• In the case where issued size is up to Rs. 100 crore than Rs 1300 per month.
• If the issued size is above Rs.100 crore up to Rs. 300 crore than Rs 2800 per month.
• If the issued size is up to Rs. 500 crore than Rs 5300 per month.
• Between Rs. 500 to Rs 1000 crore than Rs. 9300 per month
• and above Rs. 1000, the annual listing fee will be 14800 per month.

Conclusion

Finally, in this blog, we discuss various topics from What is BSE listing to How much will it cost to list a company in BSE. BSE listing is a great platform to raise funds. The best thing about BSE is that it has funding and trading platform for every business.

A new company can also list them in BSE and avail the benefits of it. So, in my view, you have to list your business on the BSE platform. It will increase the authenticity and build goodwill in the market. It also helps you to raise funds according to your need.

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