Requirements of Listing securities on the stock exchange

The listed shares and stocks build trust and confidence among investors. There are two types of lists maintained by any stock exchange. Before they are listed, a company has to fulfill some minimum requirements.

Shares and stocks may or may not be listed on the stock exchange? There are many benefits a company derives from the stock exchange. As marketer of securities, you find that stock exchange is a very important strategy. Investors are likely to buy more easily the listed securities. In fact, the stock exchange builds trust and confidence. There are two types of lists that are maintained by any stock exchange market.

Two Types of Lists

1. Cash list

2. Forward list

The securities listed on the cash list are the non cleared securities and the ones listed on the forward list are the cleared securities.

Five Conditions for Listing Securities

1. The shares and stocks should be the ones that have been admitted and dealt for at least three years in any recognized stock exchange.

2. They must be fully paid equity shares that are not from the banking company.

3. Shares and stocks should be the ones included in the cash securities list.

4. Forty nine percent of the securities must be held by the public which should be evenly distributed among a large number.

5. They should have a sufficient public interest.

Basic Requirements for Listing of Shares and Stocks

First, you must submit an application to the concerned authorities. In your application, attach the following copies: memorandum of association, article of association, prospectus, an agreement with the underwriters, specimen of certificates, letter of allotment, particulars of capital structure, particulars of shares, a certified consent of the controller of capital issues, balance sheet and lastly director’s reports of the previous year.

After you have completed submitting them, the authorities of the stock exchange scrutinize them to ascertain the following:

The fairness of your company’s size, capital structure and the public interests in its shares, if the calls paid in advance confers a right to dividends and if it has fulfilled the public minimum subscription percentage of its share capital.

After ascertaining this information and it’s satisfied that your company is qualified for listings, the authorities call upon your company to execute a listings agreement. In the agreement, your company is obliged to fulfill the following requirements throughout:

1. To treat the share and debenture applicants with equal fairness when it comes to allotments.

2. To comply with all conditions on the basis on which the securities have been listed. It should be giving notifications to the stock exchange authorities regarding the share cancellation, share redemptions, or the retirements of any listed securities. Also, it is obligated the task of forwarding copies of annual audited accounts without any delays the moment they are ready.

3. When there is an over subscription, it must consult the stock exchange authorities.

4. It must give notifications regarding the date on which the board meeting is to be held in discussing such matters as dividend recommendations, change of its capital, share issues such as bonus and right to the share holders.

Article Tags: Listing Securities, Stock Exchange

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