To understand the concept of listing of securities
To know the criteria for listing shares
To learn the listing procedure
To understand the concept of delisting
Concept of Listing of Securities
It means the admission of shares of a public limited
company on the stock exchange for the purpose of
A company intending to have its shares listed on the
stock exchange has to write an application to one or
more recognised stock exchanges.
A company becomes qualified to list its shares after
getting the prior permission from the stock exchange.
Some of the advantages of listing of securities are:
Some disadvantages of listing of securities are:
Subjected to various regulatory measures
Criteria for Listing
A company that wants its securities to be listed in the stock exchange has to fulfil certain minimum requirements, such as: Minimum issued capital: A company should have minimum issued
capital of Rs. 3 crores and the minimum public offer must be of Rs. 75 lakhs.
Listing on multiple exchanges: It is essential for a company to get listed in the stock exchange if its paid up capital is above Rs. 5 crores. Number of shareholders: A company must have a minimum ten shareholders.
Articles of Association: The Articles of Association must be prepared in line with the sound corporate practice of a company.
Advertisement: A company during the subscription period must not advertise by thanking the public for their overwhelming response. Applying mode: A company must issue a prospectus, which provides information on how the investor should apply for the shares. Public offer size: A company, in the first page of the prospectus must state the size of the public offer and the value of shares.
To get the listing permission from the stock exchange,
a company has to undertake the following steps:
Preliminary discussion: A company must have a detailed
discussion with the authorities of the stock exchange in order to acquire complete knowledge about the various formalities to be completed for listing of securities.
Articles of Association approval: A company must fulfil the following requirements in order to get the Articles of Association approved by the stock exchange authorities:
It must use a common form of transfer.
In case of distributing dividends, it must comply with Section 205-A
of the Companies Act.
The free dealing of shares must not be restricted by any provision. Draft prospectus approval: It is very essential for a company to get
its draft prospectus approved from the stock exchange authorities. A prospectus must contain all the information required by the stock exchange.
A company that wants to offer its shares through the
prospectus must file an application to the stock
A company has to file following certificates alongwith
Three certified copies of the memorandum and articles of
association, and debenture trust deed.
A copy of every report, balance sheet, valuation, court order, etc. as specified in the prospectus.
Certified copies of underwriting, brokerage and sales
Copies of agreements with the financial institutions.
It is a fee charged by the stock exchange from
the company for permitting the company’s
securities to be traded in the exchange.
It varies from major stock exchanges to regional
It also varies due to the equity base of the
Listing of Right Shares
A company has to fulfil certain formalities in case of
listing right shares in the stock exchange, such as:
A company must inform the stock exchange about the date
of meeting with the Board of Directors for considering the
proposal of listing right shares.
A company must...