NSE Updates FCFE Norms for NSE Emerge Listings

NSE Updates FCFE Norms for NSE Emerge Listings

Circular No.: NSE/SME/73818

Date: 20^th April 2026

This amendment is effective immediately and applies to all Draft Red Herring Prospectus Filed on NSE Emerge on or after 20^th April, 2026.

The National Stock Exchange (NSE) has revised the formula for calculating Free Cash Flow to Equity (FCFE) for companies planning to list on NSE Emerge, its SME platform.

An additional criterion of positive Free cash flow to Equity (FCFE) for at least 2 out of 3 financial years preceding the application was introduced w.e.f. 1st September 2024 for all SMEs desirous of listing its securities on NSE Emerge. The methodology for computing FCFE is modified as under.

What Has Changed?

Earlier, FCFE was calculated using following formula:

FCFE = Cash flow from Operations – Purchase of Fixed Assets + Net Borrowings- Interest*(1-t)

Under Revised circular, NSE has added new components:

FCFE = Cash flow from Operations – Purchase of Fixed Assets + Proceeds from issuance of Capital + Net Borrowings- Interest*(1-t)

NSE Elaborated  the definition of Proceeds from Issuance of Capital:

It includes:

• Equity Share Capital,
• Preference Share Capital,
• Securities Premium,
• other instruments classified under the head Share Capital.

Likely Impact on SME Listings

The new formula might help more companies get listed on NSE Emerge. This is especially true for companies that recently got funds from promoters, private investors or strategic partners.

Why this matters:

• Many companies were not eligible for NSE Emerge listing even if they had basics and investors trusted them.
• The new formula looks at a companys financial health and ability to raise money.
• It may improve access to capital markets for deserving SMEs.

Final Takeaway

This change can help real SMEs list on NSE Emerge. By counting money raised through share capital NSE made the rules more suitable, for growing businesses. Still focused on financial strength.