Listing provides an exclusive privilege to securities in the stock ex¬change.
Only listed shares are quoted on the stock exchange. Stock exchange
facilitates transparency in transactions of listed securities in
perfect equality and competitive conditions. Listing is beneficial
to the company, to the investor, and to the public at large.
The important advantages of listing are listed below
- Fund Raising and exit route to investors
Listing provides an opportunity to the corporates / entrepreneurs
to raise capital to fund new projects/undertake expansions/diversifications
and for acquisitions. Listing also provides an exit route to private
equity investors as well as liquidity to the ESOP-holding employees.
- Ready Marketability of Security
Listing brings in liquidity and ready marketability of securities
on a continuous basis adding prestige and importance to listed
- Ability to raise further capital
An initial listing increases a company's ability to raise further
capital through various routes like preferential issue, rights
issue, Qualified Institutional Placements and ADRs/GDRs/FCCBs,
and in the process attract a wide and varied body of institutional
and professional investors.
- Supervision and Control of Trading in Securities
The transactions in listed securities are required to be carried
uniformly as per the rules and bye-laws of the exchange. All transactions
in se¬curities are monitored by the regulatory mechanisms of the
stock exchange, preventing unfair trade practices. It improves
the confidence of small investors and protects them.
- Fair Price for the Securities
The prices are publicly arrived at on the basis of demand and
supply; the stock exchange quotations are generally reflective
of the real value of the security. Thus listing helps generate
an independent valuation of the company by the market.
- Timely Disclosure of Corporate Information
The listing agreement signed with the exchange provides for timely
dis¬closure of information relating to dividend, bonus and right
issues, book clo¬sure, facilities for transfer, company related
information etc by the company. Thus providing more transparency
and building investor confidence.
- Collateral Value of Securities
Listed securities are acceptable to lenders as collateral for
credit facili¬ties. A listed company can also borrow from financial
institutions easily as it is rated favorably by lenders of capital;
the company can also raise additional funds from the public through
the new issue market with a greater degree of assurance.
- Better Corporate Practice
Since the violation of the listing agreement entails the de-listing/suspension
of securities from the rings of the exchange, the listed companies
are ex¬pected to follow fair practices to the advantage of investors
- Benefits to the Public
The data daily culled out by the stock exchange in the form of
price quotations and others; provide valuable information to the
public which can be used for project and research studies. The
stock exchange prices can be an index of the state of the economy.
Financial institutions, NRl, individual investor’s etc. can take
wise decisions before making investments.
- Subdivision and Consolidation of Holdings
Stock exchange bye-laws provide for explicit rules for sub division
and consolidation of securities as desired by the investors. There
is special trading sessions in the exchange for conversion of
odd lots into market lots arranged by financial and institutional
investors. Thus listing helps to provide flexibility to investors
in the subdivision and consolidation of their holdings with speed