An Overview on Listing of Securities

Listing of securities refers to the process by which a company's shares or other financial instruments are officially admitted to trading on a stock exchange. Here's an overview of what listing of securities entails

1. Stock Exchange Approval

Before securities can be listed, the company must apply to the stock exchange(s) where it wishes to list its securities. Each stock exchange has its own listing requirements and eligibility criteria that companies must meet.

2. Listing Requirements

These requirements typically include

   - Financial criteria such as minimum capitalization, profitability, and financial health indicators.

   - Corporate governance standards, including composition of the board of directors and audit committee.

   - Compliance with regulatory norms and disclosure requirements.

   - Adequate public float (portion of shares held by public investors).

   - Clear business operations and track record.

3. Application Process

The company submits an application to the stock exchange(s) along with required documentation, including financial statements, corporate governance policies, and details of the securities to be listed.

4. Review and Approval

The stock exchange evaluates the application based on its listing criteria and conducts a thorough review of the company's financial standing, governance practices, and adherence to regulatory norms. If all requirements are met, the stock exchange grants approval for listing.

5. Listing Agreement

Upon approval, the company and the stock exchange enter into a listing agreement that outlines the rights and obligations of both parties, including disclosure requirements, reporting obligations, and compliance with exchange rules.

6. Trading Commencement

Once listed, the company's securities are available for trading on the stock exchange's trading platform. Investors can buy and sell these securities based on market demand and supply, contributing to price discovery and liquidity.

7. Ongoing Compliance

Listed companies are required to comply with continuing obligations such as timely disclosure of financial results, corporate actions, and material developments. They must also adhere to corporate governance standards and regulatory filings as per the exchange's rules.

8. Benefits of Listing

Listing provides companies with access to a broader investor base, enhances visibility and credibility in the market, facilitates capital raising through subsequent offerings, and improves liquidity for existing shareholders.

In short, listing of securities on a stock exchange is a significant step for companies seeking to raise capital and establish a public market for their shares or other financial instruments, subject to fulfilling stringent regulatory and market requirements.