1. SME Listing Presented by : NitiN Somani Company Secretary SPA Capital Advisors Limited Category - I Merchant Banker & Portfolio Manager February 20, 2016

2. WHAT IS AN SME By: NitiN Somani, SPA Capital Advisors Limited A definition is available under MSME Act For manufacturing segment, limits w.r.t. investment in plant and machinery: MICRO enterprise with less than Rs. 25 lakhs; SMALL enterprise with more than Rs. 25 lakhs but less than Rs. 5 cr; and MEDIUM enterprise with more than Rs. 5 cr but less than Rs. 10 cr For service segment, limits w.r.t. investment in equipments: MICRO enterprise with less than Rs. 25 lakhs; SMALL enterprise with more than Rs. 25 lakhs but less than Rs. 5 cr; and MEDIUM enterprise with more than Rs. 5 cr but less than Rs. 10 cr The aforesaid definition does not applies to the definition of SME for listing requirements @ NIRC ICSI

3. CLASSIFICATION OF AN SME By: NitiN Somani, SPA Capital Advisors Limited For the listing requirements, SME can be classified into following categories: Companies eligible for Listing on SME platform Companies eligible for Listing on ITP platform Listing criteria broadly based on financial parameters Listing criteria broadly based on sector and / or holding of the shareholders in the Company @ NIRC ICSI

4. PHASES FOR AN ORGANISATION By: NitiN Somani, SPA Capital Advisors Limited Seed funding: Promoters and close friends and relatives Angel funding: Capital for kick off with mentoring VC funding: Capital for growth (Series A) PE funding: Capital for expansion (Series B / C) @ NIRC ICSI

5. (A Platform for Small and Medium Enterprises) By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

6. ELIGIBILITY NORMS AND KEY REQUIREMENTS FOR LISTING Post issue face value capital does not exceed 25 crore Minimum Application Size shall not be less than one lakh per application Number of prospective allottees should not be less than 50. 100% underwritten Market Making for minimum 3 years Mandatory facilitation of trading in Demat securities By: NitiN Somani, SPA Capital Advisors Limited PREPARATION FOR SME IPO Appointment of intermediaries, viz. Merchant Banker, Registrar, Printer, Banker, Advertiser, Market maker Due diligence to be completed. Due diligence to cover all aspects relating to the company, legal, financial, secretarial, operational, etc Proposed project and the fund requirement for the same Marketing and creating awareness for the company & issue Interaction with various other intermediaries and stock brokers Effective communication Creating sustainable valuation and shareholder base @ NIRC ICSI

7. PROCESS FOR SME LISTING By: NitiN Somani, SPA Capital Advisors Limited Company to file draft information document with stock exchange and SEBI Obtain approval from Stock Exchanges Issue opening and issue closing Allotment / Listing Due Diligence of Company and appointment of intermediaries Total process may take around 2-3 months, if all information compiled by the Company immediately @ NIRC ICSI

8. Company advantages Regulatory BenefitsOthers Fund availability from investors Visibility and creating track record Better liquidity - entry & exit platform No tax on LTCG Lower tax rate for STCG No tax on share premium (Section 56) Simplified disclosure norms (half yearly) Enhancing shareholders value ESOPs - liquidity for employees ADVANTAGES OF SME LISTING By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

9. Post Issue Face Value Capital increases beyond Rs. 25 crores Issuer shall obtain in-principle approval from the Main Board At least Two times votes in favor than in against (pubic shareholders) Shareholders to approve by way of special resolution through postal ballot Optional Migration to Main Board Compulsory Migration to Main Board Post Issue Face Value Capital more than 10 crore rupees and upto Rs. 25 crores Shareholders to approve by way of special resolution through postal ballot At least Two times votes in favor than in against (public shareholders) Fulfills the eligibility criteria for listing by Main Board MIGRATION TO MAIN BOARD By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

10. (A Platform for Startups and Emerging Companies) By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

11. KEY FEATURES ON ITP Definition of ITP: “institutional trading platform” means the trading platform for listing and trading of specified securities of entities that comply with the eligibility criteria specified in regulation 106Y. The minimum application size shall be ten lakh rupees. The number of allottees shall be more than two hundred. The allocation in the net offer to public category shall be as follows:  75% to institutional investors, provided that there shall be no separate allocation for anchor investors.  25% to non-institutional investors. Any under-subscription in the non-institutional investor category shall be available for subscription under the institutional investors category. Allotment to institutional investors shall be on a discretionary basis and to non-institutional investors shall be on proportionate basis, The offer document shall disclose the broad objects of the issue. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

12. LISTING ELIGIBILITY FOR ENTITIES ON ITP 1(a) An entity which is in the use of technology, IT, intellectual property, data analytics, bio-technology or nano-technology to provide products, services or business platforms with substantial value addition and at least twenty five per cent of its pre-issue capital is held by QIB(s) as on the date of filing of draft information document with Board. 1(b) Any other entity which at least fifty per cent of the pre-issue capital is held by QIB(s) as on the date of filing of draft information document or draft offer document with the Board. 2No person, individually or collectively with persons acting in concert, shall hold twenty five per cent or more of the post-issue share capital in an above mentioned entity By: NitiN Somani, SPA Capital Advisors Limited LISTING OF STARTUPS THROUGH ITP ITP is the most recently launched trading platform for listing and trading of specified securities of start up ventures Listing can be done without public issue and also with public issue Lesser listing compliance requirements Trading platform for informed investors / institutions Minimum trading lot of Rs. 10 lakhs The entire pre - issue capital of the shareholders shall be locked-in @ NIRC ICSI

13.  Visibility on getting listed will improve credibility with all stakeholders  Will attract new profile of sophisticated investors in the company Higher Visibility & credibility Setting the stage  Gives flexibility to the Company to raise money for new ideas and technologies  Listing entails robust corporate governance and internal controls and systems  Prepares a company for a wider fund raising in future Non applicability of Laws  Minimum public shareholding requirements  SEBI (Delisting of Shares) Regulations, 2009  Any share premium taken by the Company for allotment of securities over and above their fair value will not be taxable (section 56 of Income Tax Act 1961) By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

14. LISTING WITHOUT PUBLIC ISSUE Company to file draft information document Obtain In-principle approval from Stock Exchanges Obtain 19(2)(b) exemption from SEBI for listing on ITP. SEBI observation deemed 19(2) (b) and 17(7) of SCRR Company to apply for listing of securities on Stock Exchanges within 30 days. By: NitiN Somani, SPA Capital Advisors Limited Due Diligence of Company @ NIRC ICSI

15. Voluntary Delisting from ITP EXIT/ DELISTING FROM ITP Shareholders to approve by way of special resolution through postal ballot 90% of the total votes should be casted in favor of delisting Majority of non promoter votes should have been casted in favor Approval of stock exchange for delisting By: NitiN Somani, SPA Capital Advisors Limited MIGRATION FROM MAIN BOARD An entity that has listed its specified securities on a recognised stock exchange in accordance with the provisions of Chapter XC of SEBI ICRD Regulations 2015 may at its option migrate to the main board of that recognised stock exchange after expiry of three years from the date of listing subject to compliance with the eligibility requirements of the stock exchange. @ NIRC ICSI

16. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

17. INTRODUCTION What is a Startup? Startup means an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. What is a Startup India Plan? Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

18. Must be a private Co./LLP/Partnership firm Age should not be more than 5 years Turnover should not exceed 25 crores Should develop a innovative product which should add to the value of customers and should be commercial Get a approval from DIPP that your company is innovative Recommendation letter by incubator in post graduate Indian College. Recommendation letter by incubator funded by GOI. Recommendation letter by incubator recognised by GOI. Is funded by an incubation fund/ Angel Fund/Private Equity Fund/ Angel Network Has patent granted by Indian Patent and Trademark Office related to business If you meet conditions A, B, C, D, E and any of F series then you are a Startup. B C D E F F1 F2F3 F4 What QUALIFIES A STARTUP? A By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

19. Key highlights Compliance regime based on self certification (app based and for certain labour & environment laws and no inspection for 3 years) To set up Start up India Hub where it will collaborate with governments, VCs, angel investors, incubators, consultants, etc Mobile app and portal for faster clearances and approvals Legal support and fast tracking patent applications at lower costs Relaxed norms for public procurement for startups Faster exit Providing funding support through fund of funds with corpus of 10,000 cr Credit guarantee fund for INR 500 cr for next 4 years Tax exemption on capital gains Tax exemption for 3 years to the start ups Tax exemption on investments above fair value Organising start up fest or showcasing innovation and providing a collaboration platform Launch of Atal Innovation Mission (AIM) with Self Employment and Talent Utilisation (SETU) program Harnessing private sector expertise for incubator setup Building innovation centre Setting up of 7 new Research Parks Promoting start ups in the Bio technology sector Launching of innovation focused programs for students Annual Incubator Grand Challenge By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

20. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

21. OPPORTUNITIES By: NitiN Somani, SPA Capital Advisors Limited Creating new business opportunities Higher visibility Acquisition of talent pool Favorable tax treatment for investments in listed shares Indian demographic advantage attracting overseas investors New business Ideas defying existing rules of the game Regulated financial markets M&A opportunities @ NIRC ICSI

22. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

23. Finding the right co-founder Raising of right capital at right time Legal and regulatory compliances and issues Management of Resources with available constraints Retention of talent Rapid Growth and adding Talent Mentorship & right advisory Favourable govt. policies & minimal entry barriers Challenges faced by SMEs By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

24. Marketing and creating visibility Balance with personal life and minimise stress Using analytics Change in technologies and adaptive systems Innovative idea and maintaining focus with prioritisation Sustainable and long term business model Capital structuring Minimising cash burn Challenges faced by SMEs By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

25. SUCCESS MANTRA FOR SMEs! Dedicated & experienced team Mentorship and focused approach Regulatory compliances Staying ahead in competition Innovations and Creativity Fund Raising By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

26. Role of Professionals Secretarial Matters: Helps in compliance of various companies act laws which changes drastically Finance Professional: Acts a financial interface between promoters and venture capitalists for fund raising and managing capital Tax Professional: Help smoothen the business operations as they are well equipped with taxation laws. Merchant Banker: Liaison with SEBI and Stock Exchanges for fund raising through capital market By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

27. ROLE FOR COMPANY SECRETARIES By: NitiN Somani, SPA Capital Advisors Limited During business conceptualization Advise on the structure for the business, based on requirement Assist in getting the right legal vehicle formed / incorporated Initial capital structuring and setting up of processes During the nascent phase of the business Hand holding for legal advisory services related to taxation matters, corporate laws, labour laws, IPR protection, etc Accounting services & secretarial support services Liasioning with various regulatory authorities Business growth phase Assisting in getting the corporate structure right Assist in designing of business plan Assist in fund raising at Angel, VC or PE stages Risk advisory Getting compliances done Exit phase Identifying the exit (partial or full) opportunities Tax planning “One stop shop for all Start up advisory” @ NIRC ICSI

28. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

29. INTRODUCTION What is Delisting? Removal of a listed company from the exchange on which it is traded Publicly available trading platform is no longer available to the shareholders Option of shareholders to exit or remain with the company Shares acquired by the promoter of the company with no change in capital structure Company and Promoters to comply with the delisting requirements and process Promoter to bear the cost of delisting (other than delisting fees) Company becomes closely held Restriction on again tapping the capital markets By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI

30. DELISTING OPTIONS By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Voluntary DelistingCompulsory Delisting Remain listed on some exchange and delist from some Delist from all exchanges As a result of action taken by Regulator

31. DELISTING OPTIONS By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Voluntary Delisting Remain listed on some exchange and delist from some Delist from all exchanges If listing continued on exchange having nation wide trading platform, no exit to be provided Small companies Other companies Simplified delisting process Reverse book building process to be followed

32. DELISTING - SMALL COMPANIES By: NitiN Somani, SPA Capital Advisors Limited Covered under Chapter VII of the SEBI Delisting Regulations Defined as: Paid up capitla not exceeding Rs. 10 cr. Net worth not eeeding Rs. 25 cr. Share not traded on any stock exchange in the past one year Company not suspended by any nation wide stock exchange for non- compliance in the last one year Special resolution is passed if: Requirement of special resolution are fulfilled i.e. ¾th majority Votes casted in favor by public shareholdes should be atleast two times the votes casted against the delisting Delisting achieved if: 90% of the public shareholders either tender their shares under the offer; or 90% of the public shareholders give their positive consent in writing from delisting and to continue as shareholder of delisted company @ NIRC ICSI

33. PROCESS By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Promoter to decide proposal for delisting and inform company Promoter to appoint merchant banker and obtain fair valuation Board to seek approval of shareholders through postal ballot Payments to be made within 15 working days Process to be completed within 75 days of first communication to shareholders Individual offer letters are sent to shareholders for providing exit opportunity

34. DELISTING - COMPANIES OTHER THAN SMALL COMPANIES By: NitiN Somani, SPA Capital Advisors Limited In principle listing approval required from the Stock Exchanges If company is suspended, revocation of suspension also to be applied for Special resolution is passed if: Requirement of special resolution are fulfilled i.e. ¾th majority Votes casted in favor by public shareholders should be atleast two times the votes casted against the delisting Shares tendered under delisting process through stock exchange platform and chargeable to STT. Shareholders to have benefit of NIL tax rate on LTCG and concessional tax rate on STCG Delisting achieved if, higher of following achieved: Promoter holding reached 90% or more of the total issued shares and Atleast 25% of the public shareholders (by number) holding shares in demat form had participated in the reverse book building process Final delisting application to be filed with one year from the date of passing of special resolution @ NIRC ICSI

35. PROCESS By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Promoter to decide proposal for delisting and inform company Promoter to appoint merchant banker and obtain fair valuation Board to appoint merchant banker for due diligence (shareholding change in 2 years) Open demat and cash escrow account Make application to stock exchanges for in-principle delisting approval Post receipt of DD report, consent of shareholders to be obtained through postal ballot Give newspaper advertisement (Hindi + English + Regional where SE situated) Dispatch offer letters to shareholders Offer to remain open for 5 working days

36. PROCESS By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Tendering of shares through platform of the stock exchange Finalisation of offer price: where 90% achieved Promoter has option to accept / reject the price so arrived at In case of success & price accepted: Payment to shareholders within 10 working days In case of failure: Return shares within 10 working days Public announcement of failure or success of offer Make final application for delisting Delisting approval Exit opportunity to remaining shareholders for 1 year

37. DELISTING - CONTENTIOUS ISSUES By: NitiN Somani, SPA Capital Advisors Limited If shareholders are participating in the reverse book building process, why there is a requirement of postal ballot approval. Removing postal ballot requirement may reduce the timelines by around 45 days and also cost. At the end of day, till company is listed, it is shareholders money How to service the remaining public shareholders, post delisting and new companies act related issued e.g. related party transactions, etc. Companies listed exclusively on regional stock exchanges which have either exited or de-recognised by SEBI Such companies moved to dessimination board of NSE and / or BSE Either Company shall get itself listed on a stock exchange with nation wide platform or Promoters to provide an exit opportunity to the public shareholders Period of 18 months provided to company / promoter to take necessary action Failure to take action by the company / promoter will impact any future association of such company / promoter with securities market Major issue: The circular for providing exit opportunity came in April 2015. However SEBI is yet to notify a process for exit opportunity. Pending any such notification, corporate houses (especially who have other listed operational companies) are taking judicious call and prudent steps for giving exit opportunity to the public shareholders of such listed companies and comply with SEBI circular ASAP. @ NIRC ICSI

38. By: NitiN Somani, SPA Capital Advisors Limited@ NIRC ICSI Contact: NitiN Somani Company Secretary SPA Capital Advisors Limited Category - I Merchant Banker & Portfolio Manager Tel.: +91 98 1069 4501 E-mail: nitin@spacapital.comnitin@spacapital.com