How to List on BSE SME and NSE Emerge in 2026: Eligibility and Process
Updated: 3 days ago
Quick answer: A company can list on BSE SME or NSE Emerge under Chapter IX of the SEBI ICDR Regulations if its post-issue paid-up capital is up to ₹25 crore and it had EBITDA of at least ₹1 crore in two of the three financial years before filing the draft offer document. The exchange's own track record and financial criteria apply on top.
Contents
Is the SME platform the right route?
Regulation 229(1) of the ICDR Regulations says an issuer whose post-issue paid-up capital is up to ₹10 crore can make an IPO only on an SME exchange. Under Regulation 229(2), an issuer with post-issue face value capital above ₹10 crore and up to ₹25 crore may also choose the SME route.
Above ₹25 crore, the main board under Chapter II is the only option. The SME route has lighter offer document review and half-yearly reporting, but compulsory market making and a high minimum application size.
Practice guide for professionals
For working-paper formats and review checklists on this topic, see the Audit Documentation & CARO 2020 Practical Guide (PDF, ₹299).
SEBI eligibility conditions
The SEBI (ICDR) (Amendment) Regulations, 2025, notified on 3 March 2025, tightened the SME framework. The main conditions now are:
Profit test: operating profit (EBITDA) of at least ₹1 crore from operations in at least two of the three financial years preceding the filing of the draft offer document.
Converted firms: a company converted from a proprietorship, partnership or LLP must have existed as a company for at least one full financial year before filing. Partnership-period track record counts only if the accounts are recast in Schedule III format and certified by a peer-reviewed auditor (Reg 229(3) proviso).
Change in promoters: where control has changed, the draft can be filed only one year after the change.
Exchange criteria: BSE SME and NSE Emerge each prescribe track record, net worth and other tests. Check the exchange's current eligibility circular before engaging a lead manager.
Worked example: eligibility test
Epsilon Engineering Pvt Ltd plans to file in January 2027. Its EBITDA was ₹0.8 crore in FY 2023-24, ₹1.4 crore in FY 2024-25 and ₹1.9 crore in FY 2025-26. Current paid-up capital is ₹6 crore and the fresh issue will add ₹2.4 crore of face value.
Profit test: two of the three preceding years (FY 2024-25 and FY 2025-26) exceed ₹1 crore, so the test is met.
Size test: post-issue capital of ₹8.4 crore is below ₹10 crore, so the SME exchange is the mandatory route.
Before filing: convert to a public limited company, convert all outstanding options and convertible securities as the 2025 amendment requires, and get restated financials certified by a peer-reviewed auditor.
Issue structure rules
Offer for sale: capped at 20% of the issue size, and no selling shareholder can sell more than 50% of their pre-issue holding.
General corporate purposes: capped at 15% of the issue size or ₹10 crore, whichever is lower.
Objects: proceeds cannot be used, directly or indirectly, to repay loans from promoters, the promoter group or related parties.
Minimum application: two lots, with an application size above ₹2 lakh, for individual investors.
Underwriting and market making: 100% underwritten, with the lead manager taking at least 15% on its own account, and market making for three years after listing.
Allottees: at least 200, up from 50.
Lock-in: minimum promoter contribution of 20% locked in for three years. Promoter holding above that is released in two steps, 50% after one year and 50% after two years.
Monitoring agency: required where the issue size exceeds ₹50 crore.
Step-by-step listing process
Board decision, appointment of a SEBI-registered lead manager, legal counsel and peer-reviewed auditor.
Conversion to a public company, capital clean-up and dematerialisation of all shares.
Restated financial statements and due diligence, including the lead manager's site visit report.
Draft offer document filed with the SME exchange for in-principle approval; the lead manager's due diligence certificate accompanies it.
Exchange observations addressed; red herring prospectus filed with the Registrar of Companies, with a copy to SEBI.
Issue opens for at least three working days; basis of allotment, allotment and listing.
After listing
An SME-listed company files half-yearly results under Regulation 33 and is exempt from several corporate governance provisions under Regulation 15(2) of the LODR Regulations. Migration to the main board is possible once the company meets the main board's eligibility and gets shareholder approval.
For the changes SEBI is now considering, read the SEBI SME IPO consultation 2026. For the filings that start after listing, see the Q2 results Regulation 33 checklist.
Related reading
Sources
Chapter IX (Regulations 228 to 268) of the SEBI (ICDR) Regulations, 2018; SEBI (ICDR) (Amendment) Regulations, 2025 dated 3 March 2025; SEBI consultation paper on SME issues dated 19 November 2024 and board memorandum of 18 December 2024; BSE notice 20250618-11 on the SME bidding process; Regulations 15(2) and 33 of the SEBI (LODR) Regulations, 2015. Verify the current exchange eligibility criteria on the BSE SME and NSE Emerge websites.
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