Small and Medium Enterprises (SMEs) play a crucial role in the economic growth and development of any country. In recent years, the Indian market has witnessed a surge in SME Initial Public Offerings (IPOs), providing these businesses with opportunities to raise capital from public investors. While the IPO listing marks a significant milestone for these SMEs, it also brings forth the responsibility of complying with various post-listing regulations and requirements. In this article, we will delve into the crucial aspects of SME IPO post-listing compliance, highlighting the key obligations that SMEs need to fulfill to maintain transparency and investor confidence.
Quarterly Compliance
One of the primary obligations for SMEs post-listing is the submission of quarterly compliance reports. These reports are a vital aspect of maintaining transparency and keeping investors informed about the company’s financial health and performance. The quarterly compliance report includes financial statements, cash flow statements, and auditor reports. By providing these reports on time, SMEs demonstrate their commitment to compliance and accountability to their shareholders.
In addition to financial reports, SMEs must also disclose information regarding changes in the board of directors, shareholding patterns, and any other significant events that may impact the company’s performance. Timely and accurate submission of quarterly compliance reports ensures that investors are well-informed, helping build trust and confidence in the company.
| S. No. | Regulation | Period Cover | Time limit of filling |
|---|---|---|---|
| 1. | Regulation 13 (3):
Pending, received, disposed, and unresolved Investor queries/complaints need to be completed |
April to June
July to Sep Oct to Dec Jan to March |
Every quarter, within 21 days of the end of the quarter. |
| 2. | Reconciliation of share capital audit report includes the reconciliation of the following:
This report needs to be submitted on a timely basis to the board, SEBI and the exchange. |
April to June
July to Sep Oct to Dec Jan to March |
Half-Yearly Compliance
Along with quarterly compliance, SMEs are required to fulfill half-yearly compliance requirements. These reports provide an overview of the company’s financial performance and operations for the first six months of the financial year. The half-yearly compliance report includes financial statements, auditor reports, and other relevant disclosures.
By adhering to half-yearly compliance, SMEs continue to demonstrate their commitment to transparency and governance. These reports also help investors and stakeholders evaluate the company’s progress and make informed decisions.
| S. No. | Regulation | Period Cover | Time limit of filling |
|---|---|---|---|
| 1. | As per Regulation 31 (1)(b) Shareholding Pattern (Details of promoters holding in the company), needs to be updated to RoC, SEBI and intimation sent to the exchanges. | April to Sept
Oct to March |
Within 21 days from the end of the relevant half year. |
| 2. | Regulation 32(8) requires companies to declare the
Statement of deviation or variation in the utilization of proceeds/object of issue. |
April to Sept
Oct to March |
Within 45 days from the end of the relevant half year. |
| 3. | Regulation 33(5) requires companies to file Financial Results in a timely manner. Additionally, a press release needs to be issued to exchanges and to SEBI apart from RoC. | April to Sept
Oct to March |
Annual Compliance
Annual compliance is a significant milestone for SMEs as it provides a comprehensive overview of the company’s financial performance, governance, and future prospects. The annual compliance report includes the audited financial statements, director’s report, corporate governance report, and other necessary disclosures.
This comprehensive report allows investors to assess the company’s financial stability and growth potential. It also reflects the company’s adherence to corporate governance practices, which is vital for building investor confidence. SMEs must ensure timely submission of the annual compliance report to the stock exchanges and regulatory authorities.
| S. No. | Regulation | Period Cover | Time limit of filling |
|---|---|---|---|
| 1. | Regulation 34(1) requires complete (Financial Statements) to be submitted. | Once in a year | Not later than the day of commencement of dispatch to its shareholders |
| 2. | Regulation 40 (10) (Listing Obligations and Disclosures) requires all obligations (outstanding and fulfilled) to be mentioned. It also requires companies to spell out the disclosures and their impact. | Once in a year | Within 30 days from the end of the financial year |
Event-Based Compliance
Event-based compliance comes into play when SMEs experience significant events that may impact their financial position or operations. These events may include mergers and acquisitions, changes in the management team, substantial expansions, or any other material developments.
SMEs are required to disclose such events to the stock exchanges and shareholders promptly. The timely dissemination of information ensures that investors are aware of any changes that might affect their investment decision. Event-based compliance is critical in maintaining transparency and avoiding any potential misinformation or rumors.
| S. No. | Regulation | Period Cover | Time limit of filling |
|---|---|---|---|
| 1. | Regulation 7 (5) – Intimation of appointment of Share Transfer Agent should be done to RoC, SEBI, exchanges and investors. | Event-based | Within 7 days of Agreement with RTA. |
| 2. | Regulation 28 (1) – In-Principle approval for the financial instrument to be launched. | Event-based | Prior to Issuance of Security. |
| 3. | Regulation 29 (1) (a) – Prior Intimations of Board Meeting for Financial Result needs to be given to authorities and investors. | Event-based | At least 5 clear days in advance (excluding the date of the intimation and date of the meeting). |
| 4. | Regulation 29(3) – Prior Intimations of Board Meeting for alteration in nature of securities needs to be given to authorities and investors. | Event-based | At least 11 clear working days in Advance |
| 5. | Regulation 30(6) – Disclosure of events specified in Part A of Schedule III (Material events) needs to be given to authorities and investors. | Event-based | Not later than 24 hours from the occurrence of an event. |
| 6. | Regulation 42(2) – Record date or Date of closure of transfer books needs to be given to authorities and investors. | Event-based | At least 7 clear working days in advance (excluding the date of intimation and the record date). |
| 7. | Regulation 44(3) – Voting results by shareholders need to be given to authorities and investors. | Event-based | Within 2 working days of the conclusion of Meeting |
| 8. | Regulation 45(3) – Change in the name of the listed entity needs to be given to authorities and investors. | Event-based | Prior approval (before filing a request for a name change with ROC) |
Conclusion
SME IPOs offer promising avenues for growth and expansion for small and medium-sized enterprises. However, with the privilege of being publicly listed, SMEs must shoulder the responsibility of adhering to various post-listing compliance requirements. By ensuring timely submission of quarterly, half-yearly, and annual compliance reports, SMEs can demonstrate transparency and accountability to their investors. Additionally, prompt disclosure of event-based compliance ensures that stakeholders are well-informed about significant developments within the company.
Complying with post-listing regulations is not just a legal requirement; it is an essential step towards building a sustainable and successful journey as a publicly listed company. Adherence to these compliance obligations helps SMEs maintain investor trust and confidence, ultimately supporting their long-term growth and prosperity in the market.
Frequently Asked Questions #
1. What is SME IPO post listing compliance? #
SME IPO post listing compliance refers to the set of regulatory obligations and requirements that small and medium enterprises (SMEs) must adhere to after successfully listing their shares on a stock exchange through an Initial Public Offering (IPO). These compliance measures aim to ensure transparency, governance, and accountability to investors.
2. What are the key regulations governing SME IPO post-listing compliance? #
The primary regulations governing SME IPO post listing compliance in India are the SEBI Listing Regulations. These regulations outline the specific rules and guidelines that SMEs need to follow to fulfill their compliance obligations.
3. What are the major components of quarterly compliance for SMEs? #
Quarterly compliance for SMEs includes the submission of financial statements, cash flow statements, auditor reports, and disclosures related to significant events during the three-month period. This ensures investors are regularly updated on the company’s financial health and operations.
4. How often should SMEs fulfill their half-yearly compliance requirements? #
SMEs must fulfill their half-yearly compliance requirements twice a year. These reports cover the financial performance and disclosures for the first six months of the financial year.
5. What does annual compliance entail for SMEs? #
Annual compliance involves submitting audited financial statements, director’s reports, corporate governance reports, and other relevant disclosures that provide a comprehensive overview of the company’s performance and governance practices throughout the financial year.
6. When should SMEs file their quarterly compliance reports? #
SMEs must file their quarterly compliance reports within 45 days from the end of each quarter, as per SEBI Listing Regulations.
7. What is the time limit for filing half-yearly compliance reports? #
SMEs are required to file their half-yearly compliance reports within 45 days from the end of each half-year period.
8. When should SMEs submit their annual compliance reports? #
SMEs should submit their annual compliance reports within 60 days from the end of the financial year.
9. What does event-based compliance involve? #
Event-based compliance requires SMEs to promptly disclose significant events that may impact the company’s financial position or operations. Such events could include mergers and acquisitions, management changes, expansions, and more.
10. What is the time frame for filing event-based compliance reports? #
SMEs should file event-based compliance reports as soon as possible, usually within 24 hours of the occurrence, to keep investors informed and prevent misinformation or rumors. This is in line with SEBI’s Listing Regulations to maintain transparency and trust.
