- Requirements of Listing
- Benefits of listing
Listing in business language suggests that permitting the securities of an organization to trade on the stock exchanges. To trade its securities over stock exchanges and to lift the fund’s corporations can choose listing. The first objective of listing is to supply liquidity and marketability with free flow of trade to happen on the stock market
Requirements of Listing
Companies should meet sure needs and follow the principles of any exchange on that it’s listed. Corporations tend to choose to be listed on the key exchanges, like the stock exchange and information system, since they supply the foremost liquidity and visibility for a company’s stock. Let’s see the necessities obligatory by some stock exchanges below:
- Any stock market: the New York Stock Exchange (NYSE) needs an organization to possess issued a minimum of 1,000,000 shares of stock price $100 million and should have earned over $10 million over the last 3 years.
- information system Stock Exchange: NASDAQ needs an organization to possess issued a minimum of 1.25 million shares of a stock price a minimum of $70 million and should have earned over $11 million over the last 3 years.
- London stock market: the most market of the London Stock Exchange needs a minimum capitalization (£700,000), 3 years of audited money statements, minimum public float (25%), and ample assets for a minimum of twelve months from the date of listing.
- Mumbai stock market: Bombay Stock Exchange (BSE) needs a minimum capitalization million (US$3.3 million) and minimum public float corresponding to corresponding to (US$1.3 million).
Benefits of listing
- Distinct Advertising value: once the corporate choose listing then the name of the corporate is detected by the general public through the print, electronic media as a brand new initial public supply. It brings a form of promotion to the corporate. If the introduction promoters are of nice name and price then the corporate will certainly Penetration into the stock market’s stakeholders. It helps the corporate to realize national importance and wide unfold recognition.
- Access to foreign investment: Listing is a sign that the corporate is prepared to adjust to the principles and rules obligatory by the stock exchanges, which inspires Institutional investor’s particularly foreign investors. This makes the corporate grab the eye nationwide.
- Flexible fundraising: The corporate will raise the funds from the general public once ever needed. There’s a major distinction in demand for the securities of listed and non-listed companies. The listing adds price to an organization which can facilitate it for simple more fundraising. The listing provides a chance to the corporates/entrepreneurs to lift capital to fund new projects/undertake expansions/diversifications and for acquisitions. Listing conjointly provides an exit route to non-public equity investors further as liquidity to the ESOP-holding staff.
- Liquidity: Listing makes the securities of an organization extremely liquid, so it will be listed on the stock market freely with no exchange obstacles.
- Supervision and management of commerce in Securities: The transactions in listed securities are needed to be carried uniformly as per the principles and bye-laws of the exchange. All transactions in securities are monitored by the restrictive mechanisms of the stock market, preventing unfair trade practices. It improves the boldness of tiny investors and protects them.
- Fair worth for the Securities: The prices are publically fell upon on the idea of demand and supply; the stock market quotations are usually reflective of the important price of the safety. Therefore listing helps generate a freelance valuation of the corporate by the market.
- Timely revealing of company info: The listing agreement signed with the exchange provides for timely disclosure of knowledge concerning dividend, bonus and right problems, book closure, facilities for transfer, company connected info, etc by the corporate. Therefore providing a lot of transparency and building capitalist confidence.
- Collateral price of Securities: Listed securities are acceptable to lenders as collateral for credit facilities. A listed company can even borrow from money establishments simply because it is rated favourably by lenders of capital; the corporate can even raise extra funds from the general public through the new issue market with bigger assurance.
- Better company follow: Since the violation of the listing agreement entails the de-listing/suspension of securities from the rings of the exchange, the listed corporations are expected to follow truthful practices to the advantage of investors and the public.
- Benefits to the general public: The data daily culled out by the stock market within the sort of worth quotations and others; offer valuable info to the general public which might be used for project and analysis studies. The stock market costs will be an index of the state of the economy. Money establishments, NRL, individual investors, etc. will take wise choices before creating investments.
- Subdivision and Consolidation of Holdings: Stock exchange bye-laws offer specific rules for sub-division and consolidation of securities as desired by the investors. Therefore listing helps to supply flexibility to investors within the subdivision and consolidation of their holdings with speed and earnestness.