SME IPO issue process

22nd Oct, 2025| 5 Min read.

The SME IPO process (Small and Medium Enterprise Initial Public Offering) is similar to a mainboard IPO but is simplified and designed for smaller companies that want to raise capital and get listed on a SME platform of stock exchanges — like BSE SME or NSE Emerge.

Here’s a clear step-by-step explanation 👇

 

1. Eligibility Check

Before applying, the SME must meet some basic conditions:

Before applying, a company must ensure it fulfills these basic conditions:

Type of Company	:Public Limited Company (Private Limited must convert first)
Post-Issue Paid-up Capital	:Minimum ₹1 crore and up to ₹25 crore
Track Record / Profitability	:Positive net worth and profitability in at least 2 of the last 3 financial years (may vary slightly as per exchange)
Net Tangible Assets	:Minimum ₹1.5 crore as per latest audited balance sheet
Net Worth	:Minimum ₹1 crore
Number of Shareholders (Post-Issue)	:Minimum 50 (to ensure liquidity)
Promoter Holding	:Should be in demat form and held for at least 3 years (pre-issue)
Dematerialisation	:Entire shareholding must be in demat form

👉 SME IPOs are listed on NSE Emerge or BSE SME — not on the main board initially.

 

2. Appointment of Advisors

The company appoints key professionals:

• Merchant Banker (Lead Manager) – to manage the IPO
• Legal Advisor – to handle legal documentation
• Registrar to Issue – to handle applications and allotments
• Auditor and Company Secretary – for compliance and financial certifications

 

3. Due Diligence and Documentation

The merchant banker conducts a due diligence check on the company’s:

• Financials
• Legal cases
• Promoter background
• Business model and risks

Then prepares documents like:

• Draft Prospectus (DRHP)
• Audited Financials
• Legal Reports

 

4. Filing of DRHP with Exchange

The Draft Red Herring Prospectus (DRHP) is submitted to the BSE SME or NSE Emerge and SEBI for review.

• Exchanges check compliance and may ask for clarifications.
• After approval, the company files the final prospectus.

 

5. IPO Marketing (Roadshows)

The company and merchant banker conduct investor meetings and presentations to attract investors — known as roadshows.

 

6. IPO Opening

The issue opens for public subscription (usually 3–5 days).
Investors (mainly HNI, retail, and institutional) can apply through ASBA in their banks.

 

 7. Allotment and Listing

• After closure, the Registrar finalizes the allotment.
• Shares are credited to investor demat accounts.
• The company gets listed on the SME platform (NSE Emerge or BSE SME).

 

8. Post-Listing Requirements

After listing, the company must follow SME-specific compliance, such as:

• Quarterly financial results
• Annual reports
• Minimum public shareholding norms

After 2–3 years of good performance, the company can migrate to the Main Board (BSE/NSE).