4. The Process of SME IPO – Step-by-step Guide to Schedule IPO

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What is SME IPO Process in India?

Small and medium enterprise Initial Public Offer (SME IPO) is the process when an unlisted SME company sells its shares to the public for the first time and listed on the stock exchange for trading. IPO Process makes a private SME company to a public limited company.

The process of SME IPO is also known as SME company ‘going public’.

Fundraising through IPO is a complex process. It involves many legal processes, audits, and professionals to help with the process. Some of the critical players in this process include:

Company Promoters
SME IPO Assistants
Registrar of Companies (RoC)
Merchant Banker or Investment Banker
Bankers
Registrar and Transfer Agents (RTA)
Market Maker
Depositories (CDLS, NSDL)
Stock Exchanges (BSE or NSE)
Auditors

SME IPO Process Steps (High Level)

IPO process is easy for SMEs in comparison to mainline IPO. But it is still a long and complicated process. It takes at least 4 months from the day company appoints a lead manager.

Appointment of Merchant Banker
Capital Structuring, Due Diligence, and Pre-IPO preparation
Appointment of Bankers, Registrar, Market Makers, RTA etc.
Preparation of Offer Document (DRHP)
Filing of DRHP with Stock Exchange
Approval from Exchange and RoC
Issue Pricing
The Opening of Public Issue
Closure of the Issue & Allocation of Shares
Listing & Trading at the Exchange

SME IPO Process Steps with Timelines

Below are the activities an SME company must take to get listed through IPO route:

SME IPO Process Schedule

Sr. No.	Activity	Timeline
1	Conversion of Company into Public Limited Company, if applicable	X
2	Preparation of Documents for conversion and submission to the Registrar of Companies (RoC) for approval. Documents includes Alteration of Memorandum, Articles & filing of necessary forms for appointment of aforesaid directors.	X+7
3	ROC approval for conversion	X+9
4	Identification & appointment of Registrar and Transfer Agents (RTA or R & T Agent). Submission of Master Creation forms with NSDL, CDSL for establishing connectivity.	X+11
5	Appointment of Managing Director, Whole Time Director, Independent Directors, Company Secretary. Deciding about their pay, sitting fees etc.	X+14
6	Constitution of committees including Audit, Shareholder Grievance and Payments.	X+17
7	Preparation of website of the Company & hosting code of conduct on the website	X+21
8	The signing of Tri-Partite Agreement with NSDL & CDSL and receipt of ISIN	X+24
9	Identification & appointment the peer review auditors. Get the financials of last 5 years restated and for last 1 year re-audited from peer review auditors.	X+26
10	Appointment of Merchant Banker & Market Maker	X+29
11	Preparation of Project Report and Draft Red Herring Prospectus (DRHP)	X+33
12	Filing of Draft Red Herring Prospectus (DRHP) with stock exchange along with an application for in-principle approval with the stock exchange	X+38
13	Clearance from stock exchange	X+75
14	Filing of Prospectus with ROC & getting it cleared from ROC	X+80
15	Filing of Final Prospectus with Stock exchange and SEBI	X+87
16	Opening of the Issue	X+90
17	Closing of the Issue	X+93
18	Finalization of Basis of Allotment by RTA & submit to the Stock exchange	X+96
19	RTA & Issuer to process corporate action to carry out lock-in for pre-issue capital held in depository system.	X+96
20	Filing of corporate action form with NSDL & CDSL and demat credit of shares	X+97
21	Filing of listing application with the Stock exchange to give listing and trading permission.	X+98
22	Post Issue Advertisement in a English, a Hindi and a Bengali Newspaper with the wide circulation within 10 days of completion of all activities.	X+98
23	Receipt of trading approval from Stock exchange	X+99

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