SEBI Tightens SME IPO Norms and ESG Disclosures
In News
What Happened
Why It Matters
Background
History & Context
What Changed
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SME IPO Profitability: BEFORE, SMEs merely needed a positive operating profit in two of the last three years (or a minimum net worth). NOW, they must report an operating profit of at least Rs 1 crore in two out of the three preceding financial years.
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Offer for Sale (OFS) Caps: BEFORE, promoters could sell large portions or even 100 percent of the issue via OFS. NOW, the OFS component is strictly capped at 20 percent of the total issue size.
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General Corporate Purpose (GCP) Limit: BEFORE, unallocated GCP funds could account for up to 25 percent of the IPO proceeds. NOW, GCP funds are capped at 15 percent of the issue size or Rs 10 crore, whichever is lower.
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ESG Value Chain Disclosures: BEFORE, listed companies were required to follow a 'comply-and-explain' mandate for BRSR value chain disclosures starting FY 2024-25. NOW, this has been deferred to FY 2025-26 and made entirely voluntary.
Prelims Angle
NCERT Connection
Practice Questions
Q1
Correct Statement(s)Which of the following statements regarding the decisions taken at SEBI's 208th board meeting is/are correct? 1. SMEs must now have an operating profit of at least Rs 1 crore in two of the last three financial years to qualify for an IPO. 2. The implementation of ESG value chain disclosures under the BRSR framework has been made strictly mandatory starting FY 2024-25.