Listing means admission of securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc.
The objectives of listing are mainly to:
-provide liquidity to securities;
-mobilize savings for economic development;
-protect interest of investors by ensuring full disclosures.
Listing provides an exclusive privilege to securities in the stock exchange. Only listed shares are quoted on the stock exchange. Stock exchange facilitates transparency in transactions of listed securities in perfect equality and competitive conditions. Listing is beneficial to the company, to the investor, and to the public at large.
Advantages of listing are listed below
Fund Raising and exit route to investors
Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund new projects/undertake expansions/diversifications and for acquisitions. Listing also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees.
Ready Marketability of Security
Listing brings in liquidity and ready marketability of securities on a continuous basis adding prestige and importance to listed companies.
Ability to raise further capital
An initial listing increases a company's ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutional Placements and ADRs/GDRs/FCCBs, and in the process attract a wide and varied body of institutional and professional investors.
Supervision and Control of Trading in Securities
The transactions in listed securities are required to be carried uniformly as per the rules and bye-laws of the exchange. All transactions in securities are monitored by the regulatory mechanisms of the stock exchange, preventing unfair trade practices. It improves the confidence of small investors and protects them.
Fair Price for the Securities
The prices are publicly arrived at on the basis of demand and supply; the stock exchange quotations are generally reflective of the real value of the security. Thus listing helps generate an independent valuation of the company by the market.
Timely Disclosure of Corporate Information
The listing agreement signed with the exchange provides for timely disclosure of information relating to dividend, bonus and right issues, book closure, facilities for transfer, company related information etc by the company. Thus providing more transparency and building investor confidence.
Collateral Value of Securities
Listed securities are acceptable to lenders as collateral for credit facilities. A listed company can also borrow from financial institutions easily as it is rated favorably by lenders of capital; the company can also raise additional funds from the public through the new issue market with a greater degree of assurance.
Better Corporate Practice
Since the violation of the listing agreement entails the de-listing/suspension of securities from the rings of the exchange, the listed companies are expected to follow fair practices to the advantage of investors and public.
Benefits to the Public
The data daily culled out by the stock exchange in the form of price quotations and others; provide valuable information to the public which can be used for project and research studies. The stock exchange prices can be an index of the state of the economy. Financial institutions, NRl, individual investors etc. can take wise decisions before making investments.
Subdivision and Consolidation of Holdings
Stock exchange bye-laws provide for explicit rules for sub division and consolidation of securities as desired by the investors. There is special trading sessions in the exchange for conversion of odd lots into market lots arranged by financial and institutional investors. Thus listing helps to provide flexibility to investors in the subdivision and consolidation of their holdings with speed and earnestness.
Are you considering to get your company listed.Read the eligibility criteria & the various regulations applicable below.
Any Company wanting to get Listed in India must following Regulations to have Public Offer
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 [Last amended on February 12, 2018]
SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 [last amended on March 6, 2017]
A listed company in India is required to follow continuous listing obligation and Disclosures need to be made as per the SEBI (LODR), Regulations, 2015 as provided below.