Listing Securities

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Listing of Securities

Chapter Objectives
 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
trading.
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:
 Liquidity
 Best prices
 Wide publicity

 Some disadvantages of listing of securities are:
 Subjected to various regulatory measures
 Expensive exercise

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.

Listing Procedure
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.

Listing Application
A company that wants to offer its shares through the

prospectus must file an application to the stock
exchange.
A company has to file following certificates alongwith
the prospectus:
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
managers’ agreement.
Copies of agreements with the financial institutions.

Listing Fee
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

stock exchanges.
It also varies due to the equity base of the

company.

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...
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