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What challenges do SMEs face when migrating from the SME platform (BSE SME or NSE Emerge) to the mainboard of BSE or NSE?
When SMEs consider migrating from the SME platform (BSE SME or NSE Emerge) to the mainboard of BSE or NSE, they may encounter several challenges. One of the primary challenges is the need to meet regulatory compliance and adhere to corporate governance norms, which can be more rigorous on the mainboard. SMEs must ensure that they have the necessary infrastructure and processes in place to fulfill these requirements.
Another challenge is the financial aspect, as migrating to the mainboard involves higher capitalization and paid-up equity capital thresholds. SMEs need to assess their financial capabilities and ensure they meet the minimum criteria set by the exchanges.
Additionally, there may be concerns related to dilution of equity, increased compliance, and oversight by regulators.
Migration to the mainboard poses several challenges for SMEs.
Compliance: SMEs must ensure compliance with strict regulatory and corporate governance standards applicable to the mainboard. This often requires additional resources, such as enhancing internal systems and procedures.
Dilution of equity: SMEs may face concerns regarding equity dilution. When a company lists on the mainboard, it must issue its own shares to the public. This can dilute existing shareholders’ ownership.
Increased compliance responsibilities: SMEs will be subject to increased compliance responsibilities as a listed company. This includes complying with the exchange’s listing rules, as well as applicable laws and regulations.
Heightened scrutiny: SMEs will be subject to heightened scrutiny by regulatory bodies as listed companies. This means that they will be more closely monitored for compliance with applicable laws and regulations.
Financial considerations: SMEs must evaluate their capitalization and paid-up equity capital to ensure they meet the higher thresholds set by the exchanges. Raising sufficient funds and managing the financial implications of migrating to the mainboard can be daunting for small businesses.