Listing of Securities

Listing of Securities
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 recognized 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 fulfill
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 fulfill 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 along with 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 fulfill 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 obtain the consent of the shareholders by
passing on a special resolution.
 A company must file a letter of offer that provides the financial
information about the current market price of the share.
 A company must file a letter of offer within six weeks.
 A company must file a specimen copy of the offer letter to the
stock exchange.
Delisting
 It is the removal of a company’s shares from the listing in
the stock exchange.
 Delisting can be of two types:
 Compulsory: The causes for compulsory delisting are as
follows:
 Non-payment of the listing fee
 Non-redressal of grievances
 Unfair trade practices carried on by the managers
 Voluntary: The causes for voluntary delisting are as follows:

 Business suspended
 Mergers and takeovers
 Small capital base

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Listing of Securities

Concept of Listing of Securities

the stock exchange if its paid up capital is above Rs.5 crores.

with the sound corporate practice of a company.

by thanking the public for their overwhelming response.

information on how the investor should apply for the shares.

the size of the public offer and the value of shares.

the authorities of the stock exchange in order to acquire complete knowledge

 It varies from major stock exchanges to regional

 It also varies due to the equity base of the

 Voluntary: The causes for voluntary delisting are as follows:

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