(1) An SME exchange is a stock exchange dedicated for trading shares of small and medium enterprises that otherwise find it difficult to get listed on main exchanges due to strict compliance requirements. (2) SME exchanges provide a framework for SMEs to raise capital quickly at low cost through public listing. (3) However, lack of awareness about SME exchanges and potential for fraud pose challenges to getting more SMEs listed.

1. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
SME EXCHANGE
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
Lakshminarayanan Alaguraja
Advocate
Altacit Global
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

2. SME EXCHANGE
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
An SME exchange is a stock exchange
Tel: +91 - 44 - 2498 4821
BANGALORE
dedicated for trading the shares of
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
small and medium scale enterprises
(SMEs) who, otherwise, find it difficult
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
to get listed in the main exchanges.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

3. STOCK EXCHANGE
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
A stock exchange provides services for stock
brokers and traders to trade stocks, bonds,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
and other securities. Stock exchanges also
provide facilities for issue and redemption of
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
securities and other financial instruments,
Tel: +91 - 80 - 6546 2400
COIMBATORE
and capital events including the payment of
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
income and dividends. Securities traded on a
Tel: +91 - 422 – 6552921
stock exchange include shares issued by
companies, unit trusts, derivatives, pooled
investment products and bonds.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

4. STOCK EXCHANGES IN INDIA
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
(a) National Stock Exchange (NSE) of
India
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
(b) Bombay Stock Exchange (BSE) of
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
India
# 48, Race Course Road,
(c) Regional Stock Exchanges (RSE) of
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
India
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

5. Over-The-Counter Exchange Of
India - OTCEI
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
The OTC Exchange of India (OTCEI), set up in
1990, was the first exchange for small
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
companies. However, OTCEI was ahead of its
time and some of the modalities were new
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
to the market and were not conducive, and
Tel: +91 - 80 - 6546 2400
COIMBATORE
hence failed.
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

6. INDUSTRY CONCERNS
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
 The cost of raising capital for SMEs is quite high.
Tel: +91 - 44 - 2498 4821
 The current means of financing for SMEs are not adequate
BANGALORE
Suite 920, Level 9, as they do not have easy access to funds from Angel
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Investors, VCs and PE players.
Tel: +91 - 80 - 6546 2400
 Most costs of compliance in raising capital under the
COIMBATORE
BB1, Park Avenue, existing guidelines are fixed. As a result, the costs become
# 48, Race Course Road,
Coimbatore - 641018. burdensome for smaller issues
Tel: +91 - 422 – 6552921
 The SMEs should be provided a framework that would
enable them to raise capital quickly and at a low cost.
 Owing to small size and less affordability, the eligibility
conditions, listing requirements, corporate governance
norms and disclosure standards may need to be suitably
EMAIL
info@altacit.com relaxed for SMEs.
WEBSITE
www.altacit.com

7. INTERNATIONAL EXPERIENCE
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
• Some of the known markets for SMEs are
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
– AIM (Alternate Investment Market) in UK,
BANGALORE
Suite 920, Level 9,
– TSX Ventures in Canada,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001. – GEM (Growth Enterprise Market) in Hong
Tel: +91 - 80 - 6546 2400
COIMBATORE
Kong,
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
– MOTHERS (Market of the high-growth and
Tel: +91 - 422 – 6552921
emerging stocks) in Japan,
– Catalist in Singapore and the latest initiative in
China - Chinext.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

8. SEBI
CHENNAI
3rd Floor, ‘Creative Enclave’,
• “SME exchange” is defined in Chapter XA of the
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004. Securities And Exchange Board Of India (Issue
Tel: +91 - 44 - 2498 4821
BANGALORE
Of Capital And Disclosure Requirements)
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Regulations] as a trading platform of a
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 recognized stock exchange or a dedicated
COIMBATORE
BB1, Park Avenue,
exchange permitted by SEBI to list the securities
issued in accordance with Chapter XA of SEBI
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
(ICDR) Regulations and this excludes the Main
Board (which is in turn is defined as a
recognized stock exchange having nationwide
trading terminals, other than SME exchange).
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

9. TO BE LISTED
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
The post-issued paid up capital of the
company should not exceed Rs. 25 Crores.
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
This means that the SME exchange is not
limited to the Small and Medium Scale
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
enterprises which are defined under The
Tel: +91 - 80 - 6546 2400
COIMBATORE
Micro, Small And Medium Enterprises
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Development Act, 2006 as enterprises where
Tel: +91 - 422 – 6552921
the investment in plant and machinery does
not exceed Rs. 10 crores.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

10. TO GET LISTED IN THE MAIN BOARDS
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
National Stock Exchange, the minimum paid
up capital required is Rs. 10 crores and that
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
of Bombay Stock Exchange is Rs. 3 crores.
Hence, those companies with paid up capital
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
between Rs. 10 crores to Rs. 25 crores has
Tel: +91 - 80 - 6546 2400
COIMBATORE
the option of migrating to the Main Board /
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
or to SME exchange.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

11. DISTINCT BENEFIT
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
SME Exchange has distinct benefit in terms of
Mylapore,
Chennai - 600 004. listing and other fees which would be about half
Tel: +91 - 44 - 2498 4821
BANGALORE
of what the main board charges. SME Exchange
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
will help SMEs towards wealth creation by the
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400 SMEs, through inclusive economic growth,
COIMBATORE
BB1, Park Avenue,
unleashing valuations and, also, creating wealth
for all stakeholders, besides considerable income
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
tax benefits and the facility to exit at any point of
time.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

12. MINIMUM SIZE OF IPOS
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
There is need for 50 investors and each shall invest
Rs. one lakh, amounting to Rs. 50 lakhs. This is post
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9, IPO paid up capital on lower side. This includes the
promoter shareholding, besides the investments by
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
the investors. Hence, it can be concluded that the
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
minimum size of the IPO can be less than Rs. 50
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 lakhs also.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

13. DOCUMENTS REQUIRED
CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road, • Keeping the Annual Reports on accounts ready
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
• Documenting the Past performance
BANGALORE
• Due diligence on the applicability of various regulations
Suite 920, Level 9,
Raheja Towers, • Due Diligence on the various approvals required from regulatory
26-27, M G Road,
Bangalore - 560 001. bodies
Tel: +91 - 80 - 6546 2400
• Documenting the Risk factors associated with the company
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
• Documenting the External environment effecting the company
Coimbatore - 641018.
Tel: +91 - 422 – 6552921 • Listing out of litigations and documenting its magnitude and
ramifications
• Documenting the Business activity
• Documenting the Material contracts and agreements
• Detailed report on promoters & management
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

14. CONCLUSION
CHENNAI
3rd Floor, ‘Creative Enclave’,
the concept of SME exchange is new to the public
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
and not many SMEs in IT channels know it
thoroughly. It is also clear that listed SMEs will
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers, attract more investors for better access to alternate
funding. Banks, financial institutions will provide
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE them the loans very easily. The major challenge
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
therefore is to instill confidence among SMEs and
Tel: +91 - 422 – 6552921
get them listed. The execution also poses a
challenge where shares listed on the exchanges are
often less known and may also give rise to frauds.
EMAIL
info@altacit.com
WEBSITE
www.altacit.com

15. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com