Listing of Securities

Meaning. Listing is the formal process by which a company's securities are admitted for trading on a recognised stock exchange, after the company enters into a Listing Agreement with that exchange and satisfies its eligibility conditions (relating to matters such as minimum paid-up capital, minimum public shareholding, profitability track record, and disclosure standards prescribed under SEBI's Listing Obligations and Disclosure Requirements framework). Only a listed security can be bought and sold through the stock exchange's trading system; an unlisted company's shares cannot be traded there.

Benefits of listing to a company.

1. Ready access to a wider capital market — a listed company finds it far easier to raise further capital in the future, because investors know an exit route exists.
2. Enhanced corporate reputation and visibility — listing raises a company's public profile and creditworthiness with banks, suppliers and customers.
3. A continuously available market valuation — the market price gives the company (and outside parties such as lenders) an objective, up-to-date measure of its worth.
4. Liquidity for promoters and early investors — venture investors and promoters can realise part of their holding once the company is listed.
5. Wider public shareholding and better governance discipline — listing rules require greater transparency and regular disclosure, which tends to improve corporate governance.

Benefits of listing to investors. Listing assures an investor of liquidity (an exit whenever needed), a fair, transparent, continuously discovered price, and the protection of the exchange's — and SEBI's — disclosure and surveillance rules, none of which would be available if the same shares were only traded informally, off any exchange. …