Listing Securities

Listing of Securities Chapter Objectives ? To understand the excogitation of leaning of securities ? To know the criteria for listing shares ? To learn the listing single-valued function ? To understand the concept of delisting Concept of Listing of Securities ?It means the admission of shares of a public limited comp all 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 pendent 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 nominal requirements, such as ? Minimum issued capi tal A company should have minimum issued capital of Rs. 3 crores and the minimum public offer must(prenominal)(prenominal) 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 preceding(prenominal) Rs. crores. ?Number of shareholders A company must have a minimum ten shareholders. ?Articles of Association The Articles of Association must be prepared in inception 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 way 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 foliate of the prospectus must state the size of the public offer and the value of shares. Listing ProcedureTo get the listing permission from the stock exchange, a company has to assume 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 plebeian form of transfer. ?In case of distributing dividends, it must comply with Section 205-A f 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 cer tificates alongwith the prospectus ?Three certified copies of the memorandum and articles of association, and debenture trust deed. A imitate 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 slant charged by the stock exchange from the company for permitting the companys securities to be traded in the exchange. ?It varies from major stock exchanges to regional stock exchanges. ?It also varies collectable to the equity base of the company. Listing of Right Shares A company has to fulfil certain formalities in case of isting 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 inwardly six weeks. A company must file a specimen copy of the offer letter to the stock exchange. Delisting It is the removal of a companys 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 Chapter Summary By now, you should have ? Understood the concept of listing of securities ? Learnt the procedure of listing of securities ? Understood the concept of delisting