Cash-starved small and medium enterprises can look forward to some easier norms to raise capital from the primary market with the government mulling over a plan to relax listing guidelines for such companies.
According to a proposal before the government, qualified institutional investors, mutual funds and high net worth individuals may be allowed to participate in the process.
The government has held talks with industry bodies including the Federation of Indian Micro and Small & Medium Enterprises (MSMEs) on the issue.
Corporate Affairs Minister Salman Khurshid has said a one-size-fits-all approach on disclosures and accounting will not work for smaller firms, which want separate guidelines.
“The plan is at a nascent stage. A decision on the same would be taken only after much deliberation,” said a government official who did not want to be identified.
At present, companies wishing to go public have to follow stringent disclosure norms and a listing agreement monitored by the Securities and Exchange Board of India.
Anil Bhardwaj, secretary-general, FISME, said his federation had held informal talks on the issue.
“There is need to have easier norms for SMEs and the federation feels that in the initial phase, retail investors should be discouraged from participating,” he said.
In the UK, smaller companies can get listed on the Alternative Investment Market — an arm of the London Stock Exchange. AIM was launched in 1995 and has raised capital for more than 2,200 companies.
More than a decade ago, India had its own over-the-counter (OTC) Exchange of India to aid small companies, but it did not take off.
SEBI may take its time on a model listing agreement for small companies.