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The oldest stock exchange in Asia, the Bombay Stock Exchange (BSE) is also the fastest in the world with a median trade speed of 6 microseconds. With over 5,300 enterprises listed, it’s a thriving marketplace that caters to businesses of all kinds. The total market capitalisation of the BSE listed companies is over ₹38,000,000 crores (as of March 28, 2024).
In addition to gaining credibility, more capital, investor confidence, and a global reputation, listing on BSE opens doors to many other opportunities.
Let’s explore the benefits that BSE listed companies enjoy and the eligibility criteria for BSE IPO listing.
Steps to get listed on BSE
The Bombay Stock Exchange (BSE) listing process consists of the following steps:
- Submission of draft prospectus: Draft prospectuses or red herring prospectuses (DRHPs) are required as an initial stage in the listing process. According to the criteria, the merchant banker prepares these documents and files them with the exchange and SEBI.
- Verification & site visit: The materials are reviewed and processed by BSE after the draft prospectus is submitted. The verification process also involves visiting the site.
- Approval: Following the completion of all necessary procedures by the issuer company, BSE grants ‘in principle’ approval per the committee’s suggestion.
- Filing of prospectus with ROC: After everything is finalised, the merchant banker will file the prospectus with the registrar of companies (ROC).
These are the main stages to follow, but they might change based on the listing type (IPO/FPO, Direct Listing, SME Listing, etc.). To be listed on BSE, a company must meet the eligibility criteria and follow the protocols associated with each type of listing.
BSE listing criteria for direct listing
To apply for a direct listing on BSE, a company must be listed on a national stock exchange and have an average daily equity segment turnover of less than ₹500 crores in the most recent fiscal year.
- Issued and paid-up capital: The applicant business must have maintained a minimum of ₹10 crores in issued, paid-up, and listed equity capital for each of the three fiscal years before the current one.
- Net worth requirement: In each of the three fiscal years before the current one, the applicant company’s net value must have been at least ₹200 Crores (after deducting any accrued losses).
- Net profit before tax: Each of the three preceding fiscal years’ net profit before tax (NPBT) must have been at least ₹15 crores.
- Dividend record: In the last three years, the business should have paid dividends.
- Number of public shareholders: There should be at least 500 public shareholders in the company.
- Public shareholding: When it comes to the minimum level of public shareholding, the company should follow regulation 38 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.
- Trading in compulsory demat: The company should have at least 50% of its public shares dematerialised and all of its promoters’ shares dematerialised as well.
Eligibility criteria for BSE SME listing
Companies can get listed on the Bombay Stock Exchange (BSE) through initial public offerings (IPOs) and Follow-on Public Offerings (FPOs) if they meet the following requirements:
Minimum paid capital: Companies that want to go public must have at least ₹10 Cr in paid-up capital and ₹3 Cr for a follow-on public offering (FPOs). The company will have enough money to run smoothly.
Issue size: This issue can’t be less than ₹10 crore. It is done to make sure that there are enough shares of the company available on the market.
Minimum capitalisation: The company must have a market capitalization of at least ₹25 crore. To find the market capitalization, multiply the number of fully paid-up equity shares with the price of the issue.
Benefits of listing
The Bombay Stock Exchange was started by Premchand Roychand in 1875, and Shri Sundararaman Ramamurthy is currently in charge as its Managing Director and CEO.
Here is a BSE stocks list of the top 15 companies by market capitalisation.
Here are some reasons why listing a business is a good idea:
- Fundraising and exit route to investors
- Ready marketability of security
- Ability to raise further capital
- Fair price for the securities
- Timely disclosure of corporate information
Bottomline
The process of listing on the Bombay Stock Exchange (BSE) is a significant step for any company. It requires meeting specific eligibility criteria, which vary based on the type of listing.
However, the benefits of being part of the BSE stocks list are manifold, including increased visibility, access to capital, and enhanced credibility.
FAQs
Yes, a private company can be listed on a stock exchange. However, it must first transition to a public company. This involves meeting specific regulatory requirements, including those set by the Securities and Exchange Board of India (SEBI). The company must also undergo an Initial Public Offering (IPO), where its shares are offered to the public for the first time.
Yes, a company can be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This is known as multiple or cross-listing. The company must meet the listing criteria of both exchanges, which involves regulatory requirements and a process that includes applying to the exchanges, meeting the eligibility criteria, filing necessary documents, and issuing shares to the public.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two major stock exchanges in India. BSE, established in 1875, is the oldest, while NSE, established in 1992, is the largest. BSE’s benchmark index is SENSEX (top 30 companies), while NSE’s is NIFTY (top 50 companies). NSE has a higher trading volume and market capitalization compared to BSE. Both offer platforms for trading various financial instruments.
Yes, a company can be listed on a stock exchange without an IPO through a process known as Direct Listing. In Direct Listing, existing shares are sold directly to the public without the involvement of underwriters. Another method is through a Demerger, where a company gets listed as a result of a demerger from a parent company. Both methods bypass the traditional IPO route.
Yes, a private limited company can trade in the stock market. However, it’s not as straightforward as an individual trading. The company can invest in publicly listed shares if its Memorandum of Association allows such investing. However, for trading activities, it may fall under the criteria of a Non-Banking Financial Company (NBFC), requiring approval from the Reserve Bank of India (RBI).