IPO Eligibility

NSE Emerge Eligibility Criteria for SME IPO Listing

Conditions Precedent to Listing

Before listing on the NSE Emerge Platform, the issuer must have adhered to all conditions arising from the following statutes and their subordinate instruments:

Securities Contracts (Regulations) Act, 1956
Companies Act, 1956 / 2013
Securities and Exchange Board of India Act, 1992
Any rules, regulations, circulars, clarifications, or guidelines issued by the appropriate authority under the foregoing statutes

Eligibility Criteria

The following criteria must be complied with as of the date of filing the Public Offer Document with NSE, as well as at the time of filing the same with the Registrar of Companies (RoC) and SEBI.

Incorporation

The issuer must be a company incorporated in India under the Companies Act, 1956 or 2013.

Post-Issue Paid-Up Capital

The post-issue paid-up capital of the company (face value) must not exceed Rs. 25 crores.

Track Record

The issuer must demonstrate a track record of at least 3 years through any one of the following:

The applicant company itself seeking listing, or
The promoters or promoting company, incorporated in or outside India, or
A proprietary or partnership firm that has been subsequently converted into a company (not in existence as a company for three years) and approaches the Exchange for listing

Note on Promoters: For track record, promoters mean one or more persons with a minimum of 3 years of experience in the same line of business and holding at least 20% of the post-issue equity share capital, individually or severally.

Note on Conversion Cases: Where a company has been formed through conversion from a proprietorship, partnership firm, or LLP, the financial statements must comply with Schedule III of the Companies Act, 2013 and must be certified by an auditor holding a valid ICAI Peer Review Board certificate.

Minimum Operational History After Incorporation

Irrespective of the track record being derived from promoters, a promoting company, or a converted entity, the issuer company must have completed at least one full financial year of operations after incorporation, along with audited financial statements for that period.

Financial Criteria

Operating Profit (EBIDT)

The issuer must have an operating profit (earnings before interest, depreciation and tax) of at least Rs. 1 crore from operations in any 2 out of 3 previous financial years preceding the application date.

Net Worth

The company's net worth must be positive.

Free Cash Flow to Equity (FCFE)

The company must have positive Free Cash Flow to Equity (FCFE) for at least 2 of the 3 financial years preceding the application.

Offer for Sale (OFS) Restrictions

The OFS component in an SME IPO shall not exceed 20% of the total issue size.
Selling shareholders cannot sell more than 50% of their pre-issue holding through the OFS.

Outstanding Convertible Securities

The company must not have any outstanding convertible securities or rights that entitle any person to subscribe for equity shares of the issuer (other than ESOPs) at the time of filing for listing.

Promoter Contribution And Lock-In

Promoters must hold a minimum contribution of 20% of the post-issue paid-up capital, which shall be locked in for 3 years from the date of allotment.
Excess promoter shareholding beyond the minimum 20% shall be locked in 2 phases - 50% for 1 year, remaining 50% for 2 years from the date of allotment.
All pre-issue capital held by non-promoters is subject to a lock-in of 6 months from the date of allotment.

Mandatory Underwriting And Market Making

The issue must be 100% underwritten, with the Merchant Banker underwriting a minimum of 15% of the issue size from their own account.
Appointment of a Market Maker is mandatory for a minimum period of 3 years post-listing, as per the NSE Emerge Market Maker framework.

Use of IPO Proceeds

Issue proceeds shall not be used, directly or indirectly, for repayment of loans taken from promoters, promoter group, or any related party.
The amount earmarked for General Corporate Purposes (GCP) shall not exceed 15% or Rs. 10 crores, whichever is lower, of the total amount raised. The aggregate amount for GCP and unidentified acquisitions shall not exceed 25% of the total amount raised.
The issuer must make firm financial arrangements through verifiable means for at least 75% of the proposed means of finance for the project intended to be funded from issue proceeds, excluding the amount to be raised through the proposed public offer and existing internal accruals.

Disciplinary Action

No stock exchange with nationwide trading terminals should have taken any regulatory action, including suspension of trading against the promoter(s) or any companies promoted by them.
The promoter(s) or directors must not hold the position of promoter or non-independent director in any company that has been compulsorily delisted by the Exchange or is suspended from trading due to non-compliance.
No director of the company should have been disqualified or debarred by any regulatory authority.
The issuer, its promoters, promoter group, directors, or selling shareholders must not have been debarred by SEBI from accessing the capital market.
The issuer or any of its promoters or directors must not be classified as a wilful defaulter, fraudulent borrower, or fugitive economic offender under the Fugitive Economic Offenders Act, 2018.

Default

The applicant company, its promoters, promoting company(ies), and subsidiary companies must have no pending defaults in the payment of interest and/or principal to debenture holders, bond holders, or fixed deposit holders.

Other Listing Conditions

The applicant company must not have been referred to the erstwhile Board for Industrial and Financial Reconstruction (BIFR), and no proceedings must have been admitted under the Insolvency and Bankruptcy Code (IBC) against the issuer or its promoting companies.
The company must have no winding-up petition admitted by an NCLT or Court.
There must be no material regulatory or disciplinary action by any stock exchange or regulatory authority in the past three years against the applicant company.
The issuer must ensure that none of the Merchant Bankers involved in the IPO have had any IPO Draft Offer Document filed with the Exchange returned in the past 6 months from the date of application. The Left Lead Merchant Banker and any other Merchant Banker responsible for due diligence and drafting of the offer document shall be considered for this purpose.

Other Requirements (Applicable to All Companies)

The company must have a functional website.
100% of the promoter's shareholding in the company must be held in dematerialised form.
The company must facilitate trading in demat securities and must enter into agreements with both depositories.
There must be no change in the promoters of the company during the one year preceding the date of filing the application with NSE.
Where there has been a change in promoter ownership exceeding 50%, the company must observe a 1-year waiting period from the date of such change before filing the draft offer document.
The composition of the board must be in compliance with the requirements of the Companies Act, 2013 at the time of in-principle approval.
Net worth shall be computed as per the definition provided under the SEBI (ICDR) Regulations.
Where the issue size exceeds Rs. 50 crores, appointment of a Monitoring Agency is mandatory.
A Statutory Auditor Certificate for fund utilisation must be submitted along with quarterly financial statement filings. Where working capital as an object of issue exceeds Rs. 5 crores, an additional auditor certificate is required.
The SME IPO DRHP must undergo a 21-day public review, with newspaper advertisements published within 2 days of filing. A QR code must be provided for seamless investor access.

Offer Document Disclosure Requirements

The following matters must be disclosed in the offer document:

Any material regulatory or disciplinary action by a stock exchange or regulatory authority in the past year in respect of promoters, promoting companies, group companies, or companies promoted by the promoters
Defaults in payment of interest and/or principal to debenture holders, bond holders, fixed deposit holders, banks, or financial institutions by the applicant, promoters, group companies, or companies promoted by the promoters during the past three years. An Auditor's Certificate must also be provided by the issuer to the Exchange in this regard.
The litigation record of the applicant, promoters, group companies, and companies promoted by the promoters, including the nature and current status of all pending litigation
In respect of the track record of directors, the status of criminal cases filed or the nature of investigations being undertaken about the alleged commission of offences, where any director has been charge-sheeted with serious crimes such as murder, rape, forgery, or economic offences, and their effect on the business of the company

Cooling-Off Period: A minimum 6-month gap from the date of withdrawal or rejection of an issue is required before a fresh application can be made.

Special Criteria for Specific Categories of Businesses

While the above criteria apply to all companies seeking listing on NSE Emerge, the following categories of companies are subject to distinct eligibility requirements due to their unique business models, funding structures, and growth profiles.

A. Additional Criteria for Technology Startups

Technology startups, in addition to meeting the general incorporation, post-issue capital, track record, and listing conditions outlined above, must comply with the following in place of the standard EBIDT and FCFE criteria:

Financial And Growth Criteria:

The company must have an annual revenue of not less than Rs. 10 crores and must have demonstrated an annual growth of at least 20% in the past year. Annual growth may be measured by the number of users, revenue growth, or customer base expansion.
The company's net worth must be positive.

Shareholding Conditions:

The company must satisfy at least one of the following conditions as on the date of filing the Draft Offer Document:

At least 10% of the pre-issue capital must be held by one or more Qualified Institutional Buyers (QIBs), or
At least 10% of the pre-issue capital must be held by a member of an Angel Investor Network or a Private Equity Firm, provided that such angel investor network or private equity firm:
- Has made investments in 25 or more startups in the startup ecosystem, and
- Has an aggregate investment of more than Rs. 50 crores as on the date of filing the draft offer document

B. Eligibility Criteria for Institutional Trading Platform (ITP)

The ITP is a dedicated segment within NSE Emerge designed exclusively for entities with significant institutional backing. The standard financial criteria (EBIDT, FCFE, revenue thresholds) and track record requirements applicable to general SME issuers do not apply to ITP-listed entities. Instead, the following distinct eligibility framework applies:

Who Can List on the ITP?

Category A — Technology And Innovation-Intensive Entities:

An entity that is intensive in the use of technology, information technology, intellectual property, data analytics, bio-technology, or nano-technology to provide products, services, or business platforms with substantial value addition, and where at least 25% of its pre-issue capital is held by QIBs as on the date of filing the Draft Information Document or Draft Offer Document with SEBI.

Category B — Other Entities:

Any other entity in which at least 50% of its pre-issue capital is held by QIBs as on the date of filing the Draft Information Document or Draft Offer Document with SEBI.

Additional Listing Conditions Specific to ITP:

The company, its promoters, group companies, or directors must not appear on the Wilful Defaulters List maintained by the Reserve Bank of India and CIBIL.
The company, its group companies, or subsidiaries must not have been referred to the BIFR within the five years prior to the date of application for listing.
No regulatory action must have been taken against the company, its promoters, or directors by SEBI, the Reserve Bank of India, IRDAI, or the Ministry of Corporate Affairs within the five years prior to the date of application for listing.

Investor Participation And Issue Structure

The SME IPO must have at least 200 allottees (investors) at the time of allotment.
Investors are required to apply for a minimum of 2 lots, resulting in a minimum application size of ₹2 lakhs or more, depending on the issue price and lot size.

The company must ensure a minimum 25% public shareholding post-issue, in line with SEBI requirements.

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