Information

What is Listing?

The inclusion of the name of a company in the official list of securities, which can be dealt with in a stock exchange, is called listing. It implies the securities of a company to the trading privileges on a stock exchange.

By getting its securities listed, a company can create a favorable impression in the mind of the investors about its financial soundness, profitability and the marketability of its shares and other securities. At the same time, it should also be remembered that listing would no way guarantee the earning capacity of the securities of the issuing company.

Moreover, in India, the Central Government is also empowered under Sec. 21 of the Securities Contracts (Regulation) Act to compel a public limited company to get its securities listed on any recognized stock exchange, with a view to protect the broad interests of the investing public.

Any company, which wants to get its shares listed, should apply to regional stock exchange i.e. to the stock exchange nearest to its registered office. It may also get its shares listed on other stock exchanges as well.

Objectives of Listing :-

The main objectives of listing are the following:

  • Provision of ready marketability.
  • Imparting liquidity to the securities.
  • Provision of free negotiability.
  • Protection of the interests of the investors and the general public.

Conditions for Listing of Securities :-

The listing regulations of all the recognized stock exchanges are not uniform. A company, which wants to get its securities listed, should fulfil certain requirements and furnish certain detailed information to the exchange. The general conditions for listing are given below:

  • An issuer making an initial public offer shall ensure that:
    • it has made an application to one or more stock exchanges to seek an in-principle approval for listing of its specified securities on such stock exchanges and has chosen one of them as the designated stock exchange, in terms of Schedule XIX;
    • it has entered into an agreement with a depository for dematerialisation of the specified securities already issued and proposed to be issued;
    • all its specified securities held by the promoters are in dematerialised form prior to filing of the offer document;
    • all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited;
    • it has made firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance for a specific project proposed to be funded from the issue proceeds, excluding the amount to be raised through the proposed public issue or through existing identifiable internal accruals.
  • The amount for general corporate purposes, as mentioned in objects of the issue in the draft offer document and the offer document shall not exceed twenty five per cent. of the amount being raised by the issuer.

Advantages

For Listing :-

The advantages of listing can be summarized under two heads namely,

  • Advantages to the company management.
  • Advantages to the investors.
To the Company Management :-
  • It gives the management and the company a higher status and facilitates expansion programmes.
  • Such companies can raise finance very easily.
  • Such companies are better placed while approaching the SEBI for its consent under any of the provisions of the SEBI Act.
  • Listed companies are treated favorably by the financial institutions and commercial banks when they approach them for short-term and long-term accommodations.
To the Investors :-
  • Listing makes the securities more prestigious and enhances their marketability. Hence, the holders of such securities can convert their holdings without any difficulty in times of need.
  • The security prices are regularly published in the financial newspapers and periodicals. Hence, the investors can sell their holdings at the current market price.
  • Such securities generally fetch higher prices.
  • Holders of listed securities are eligible for certain concessions in matters relating to Income Tax, Wealth Tax etc. in their capacity as assesses.
  • Listed securities enjoy more public confidence. Hence, they have high collateral value. The bankers will readily accept such securities for providing loans and other accommodations.
  • Listed companies should make a fair disclosure of certain information and so the investors are given a reasonable opportunity of judging the merits of the concern.
  • Listed securities ensure safety to the funds of the investors.
Information
What is Listing?

The inclusion of the name of a company in the official list of securities, which can be dealt with in a stock exchange, is called listing. It implies the securities of a company to the trading privileges on a stock exchange.

By getting its securities listed, a company can create a favorable impression in the mind of the investors about its financial soundness, profitability and the marketability of its shares and other securities. At the same time, it should also be remembered that listing would no way guarantee the earning capacity of the securities of the issuing company.

Moreover, in India, the Central Government is also empowered under Sec. 21 of the Securities Contracts (Regulation) Act to compel a public limited company to get its securities listed on any recognized stock exchange, with a view to protect the broad interests of the investing public.

Any company, which wants to get its shares listed, should apply to regional stock exchange i.e. to the stock exchange nearest to its registered office. It may also get its shares listed on other stock exchanges as well.

The main objectives of listing are the following:

  • Provision of ready marketability.
  • Imparting liquidity to the securities.
  • Provision of free negotiability.
  • Protection of the interests of the investors and the general public.

The listing regulations of all the recognized stock exchanges are not uniform. A company, which wants to get its securities listed, should fulfil certain requirements and furnish certain detailed information to the exchange. The general conditions for listing are given below:

  • An issuer making an initial public offer shall ensure that:
    • it has made an application to one or more stock exchanges to seek an in-principle approval for listing of its specified securities on such stock exchanges and has chosen one of them as the designated stock exchange, in terms of Schedule XIX;
    • it has entered into an agreement with a depository for dematerialisation of the specified securities already issued and proposed to be issued;
    • all its specified securities held by the promoters are in dematerialised form prior to filing of the offer document;
    • all its existing partly paid-up equity shares have either been fully paid-up or have been forfeited;
    • it has made firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance for a specific project proposed to be funded from the issue proceeds, excluding the amount to be raised through the proposed public issue or through existing identifiable internal accruals.
  • The amount for general corporate purposes, as mentioned in objects of the issue in the draft offer document and the offer document shall not exceed twenty five per cent. of the amount being raised by the issuer.
For Listing :-

The advantages of listing can be summarized under two heads namely,

  • Advantages to the company management.
  • Advantages to the investors.
To the Company Management :-
  • It gives the management and the company a higher status and facilitates expansion programmes.
  • Such companies can raise finance very easily.
  • Such companies are better placed while approaching the SEBI for its consent under any of the provisions of the SEBI Act.
  • Listed companies are treated favorably by the financial institutions and commercial banks when they approach them for short-term and long-term accommodations.
To the Investors :-
  • Listing makes the securities more prestigious and enhances their marketability. Hence, the holders of such securities can convert their holdings without any difficulty in times of need.
  • The security prices are regularly published in the financial newspapers and periodicals. Hence, the investors can sell their holdings at the current market price.
  • Such securities generally fetch higher prices.
  • Holders of listed securities are eligible for certain concessions in matters relating to Income Tax, Wealth Tax etc. in their capacity as assesses.
  • Listed securities enjoy more public confidence. Hence, they have high collateral value. The bankers will readily accept such securities for providing loans and other accommodations.
  • Listed companies should make a fair disclosure of certain information and so the investors are given a reasonable opportunity of judging the merits of the concern.
  • Listed securities ensure safety to the funds of the investors.