Listings of Securities in

Stock Exchange
Mayank Tripathi
UG17-58
Definitions and minimum requirements
• Listings
• Parekh Platinum Ltd. v Stock Exchange (Listing Defined)
• 25 % of each kind of securities [Rule 19(2)(b) SCRR,1957].
• SEBI v. Sahara (2012)
Requirements for listing
• Minimum issued equity capital of Rs. 3 crores.
• Profit track record for at least last three years.
• Minimum net worth of Rs. 20 crores (Net worth includes equity capital and free
• reserves excluding revolution reserves)
• Minimum market capitalization of Rs. 20 crores, based on average price of last six
• months.
• Trading for a minimum 50% of the total trading days during the same six months on
• any stock exchange.
• Minimum average volume traded per day during the last three complete months should
• 1000 shares and minimum 5 trades per day by day.
• 25% of the issued capital should be with public (including body corporate) and
• minimum 15 shareholders per Rs. 1 Lakh of capital in the public category.
Advantages
Repayment of capital
• No question of repayment of capital except when the company is in liquidation, therefore low risk.
Rate of Interest
• There is no rate of interest to be payed resulting in less financial burden.
• Enhancing shareholders, promoters and company’s product/ service value
• Companies good performance results in enhancing shareholders, promoters and company’s products/
services value.
Transferability
• Transferability to a greater extent.
Securities
• Trading & Listing of securities at stock exchanges.
Liquidation of securities
• Securities can be liquidated better.
Disadvantages
Procedure is quite lengthy and requires a lot of time.
Expensive
• It’s expensive as there is a higher dividend expectation which are not tax-deductible.
Complexity
• There are many complex legal rules and procedure.
Dilution of control
• There is dilution of control since capital base might be expanded and new shareholders/ public are involved.
Less Privacy
• Less privacy due to transparency requirement
Scrutiny of performance
• Constant scrutiny of performance by investors.
Takeover of the company
• May lead to takeover of the company
Effect of speculative attacks
• Securities of the Company may be made subjective to speculative attacks.
Listing Agreement Clause 49
• Code of conduct for board members and senior management should
be laid down by company boards.
• Audit committee should review financial statement and draft audit
report with company management.
• Chief executive and chief finance officers should certify the balance
sheet, profit and
• loss account and cash flow statements in Directors’ report.
Drawbacks of Listing in Contemporary world
• Book Making
• Loss in PSU’s
• Chances of Fraud
• Industrial Sickness.
Conclusion