Listing of Securities
Listing of Securities
Listing of Securities
Meaning of Listing
Any kind of securities can neither be purchased nor sold at any of the stock-exchange
without the prior permission of Stock exchange. Every company needs to register(listed)
their stocks at any stock exchange this process called Listing. when a security is included in
the list with term, conditions, and objectives for sales then such security called as Listed
Security.
Disadvantage of Listing
I. Encourage speculation: After listing there is lot of speculations in shares.
Speculators may manipulate the prices of share.
II. Bad Publicity: Companies, sometimes, have to pass through lean periods when their
performance is not up to the mark. This situation creates bad publicity.
III. Discloses vital information to competitors: For getting the securities listed, a
company has to disclose vital information such as, dividends and bonuses declared, a
brief history of the company, sales, remuneration to managerial personnel and so
on.
Listing Procedure
As stated earlier, listing enables a company to include its securities in the official list of one
or more recognized stock exchanges for the purpose of trading. A company which requires
its securities to be listed must comply with the following formalities:
The company concerned must apply in the prescribed form along with the following
documents and details:
a. Certified copies of Memorandum and Articles of Association, Prospectus or
Statement in lieu of Prospectus, Underwriting agreements, agreements with
vendors and promoters, etc.
b. Specimen copies of shares and debenture certificates, letter of call,
allotment, acceptance, and renunciation.
c. Copies of balance sheets and audited accounts for the last 5 years.
d. Copies of offers for sale and circulars or advertisements offering any
securities for subscription or sale during the last 5 years.
e. Certified copies of agreements with managerial personnel.
f. Particulars of dividends and bonuses paid during the last 10 years
g. A statement showing dividends or interest in arrears if any.
h. A brief history of the company since its incorporation, giving details of its
activities.
i. Particulars regarding its capital structure.
j. Particulars of shares and debentures for which permission to deal is applied
for and their issue.
k. A statement showing the distribution of shares along with a list of highest 10
holders of each class or kind of securities of the company stating the number
of securities held by them.
l. Particulars of shares forfeited.
m. Certified copies of agreements if any with the Industrial Finance Corporation,
ICICI, etc.
n. Listing agreement with the necessary initial and annual listing fee.
Listing Obligations
A company whose securities have been listed on a stock exchange has to perform certain
obligations also. Some of the important obligations have been given here under:
The company has to compulsorily notify the stock exchange:
I. The date of the board meeting at which the declaration or recommendation of
dividend or the issue of right or bonus share will be considered.
II. Any change in the company's directorator managerial personnel by death,
resignation, removal or otherwise
III. Any issue of new shares, rights shares or otherwise as well as the issue of any
privileges or bonuses to members, even before they are intimated to shareholders.
IV. Any change in the company's capital structure.
V. Any material changes in the general character or nature of the company's business.
VI. Any reissue of forfeited securities or the issue of any other securities held in reserve
for future issue.
VII. Any action which will result in the redemption, cancellation or retirement of any
securities listed on the stock exchange.
VIII. Any intention to make a drawing of listed securities.
IX. Any other information necessary to enable the shareholders to appraise the
company's position so as to avoid the establishment of a false market in the shares
of the company.
X. In addition to the above, the company has to forward to the stock exchange:
a) Copies of all notices and circulars sent the shareholders including the proceedings of
ordinary and extraordinary general meetings.
b) Certified copies of all resolutions passed by the company as soon as such resolutions
become effective.
c) Copies of statutory and annual reports and annual audited accounts as soon as they
are issued as well as the director's report.
d) Annual return of at least 10 principal holders of each class of security of the
company