Corporate Listing (finance)

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In corporate finance, a listing refers to the company's shares being on the list (or board) of stock
that are officially traded on a stock exchange. Some stock exchanges allow shares of a foreign
company to be listed and may allow dual listing, subject to conditions.

Normally the issuing company is the one that applies for a listing but in some countries[which?] an
exchange can list a company, for instance because its stock is already being traded via informal
channels.

Stocks whose market value and/or turnover fall below critical levels may be delisted by the
exchange. Delisting often arises from a merger or takeover, or the company going private.

Listing requirements
Each stock exchange has its own listing requirements or rules. Initial listing requirements
usually include supplying a history of a few years of financial statements (not required for
"alternative" markets targeting young firms); a sufficient size of the amount being placed among
the general public (the free float), both in absolute terms and as a percentage of the total
outstanding stock; an approved prospectus, usually including opinions from independent
assessors, and so on.

Examples of listing requirements

The listing requirements imposed by some stock exchanges include:

 New York Stock Exchange: the New York Stock Exchange (NYSE) requires a company
to have issued at least a million shares of stock worth $100 million and must have earned
more than $10 million over the last three years.[1]
 NASDAQ Stock Exchange: NASDAQ requires a company to have issued at least 1.25
million shares of stock worth at least $70 million and must have earned more than $11
million over the last three years.[2]
 London Stock Exchange: the main market of the London Stock Exchange requires a
minimum market capitalization (£700,000), three years of audited financial statements,
minimum public float (25%) and sufficient working capital for at least 12 months from
the date of listing.
 Bombay Stock Exchange: Bombay Stock Exchange (BSE) requires a minimum market
capitalization of ₹250 million (US$3.8 million) and minimum public float equivalent to
₹100 million (US$1.5 million).[3]

Delisting
Delisting refers to the practice of removing the stock of a company from a stock exchange so
that investors can no longer trade shares of the stock on that exchange. This typically occurs
when a company goes out of business, declares bankruptcy, no longer satisfies the listing rules of
the stock exchange, or has become a private company after a merger or acquisition, or wants to
reduce regulatory reporting complexities and overhead, or if the stock volumes on the exchange
from which it wishes to delist are not significant. Delisting does not necessarily mean a change
in company's core strategy.[4]

In the United States, securities which have been delisted from a major exchange for reasons other
than going private or liquidating may be traded on over-the-counter markets like the OTC
Bulletin Board or the Pink Sheets.

Listing and Delisting of Companies

Listing of Companies denotes permission granted by a stock exchange, to a company, for
trading of its particular securities (e.g. equity shares, debentures etc.) on the stock
exchange. Delisting of Companies refers to the removal of a company's shares from listing
on the stock exchanges, either voluntarily or involuntarily. Delisting of securities represents
the removal of that particular security for dealing on the stock exchange. As a consequence
of delisting of companies, the delisted securities can no longer be traded at that stock
exchange. Delisting can be carried out in two ways:

 Voluntary Delisting
 Compulsory Delisting

In voluntary delisting, the company or its promoters or any other persons other than stock
exchange can choose to remove its securities from the stock exchange. SEBI Guidelines
has prescribed its mode, procedure & manner to be adopted by the company. The final exit
price is to be paid to the shareholder, which is decided through reverse book building
method.

Compulsory delisting can be initiated by the stock exchanges by the companies with terms
of Listing Agreement only for default whereby the trading has been suspended for more
than six months or as per the norms laid down in the SEBI Guidelines.

Delisting may also result as a consequence of Amalgamation, demerger merger, or

Winding up of the Company.

Rights of Investors:

Voluntary Delisting:
It is obligatory for the promoter(s) of a Company who desires to delist from the exchange
to offer an exit price to the shareholders before delisting of securities. Such price is to be
determined through the 'reverse book building' procedure.

Compulsory Delisting:
Where the securities of the company are delisted by an exchange, the promoters of the
company are legally responsible to compensate the security-holders of the company by
paying them the fair value of the securities held by them and acquiring their securities,
subject to their option to remain security holder with the Company. The fair value is to be
determined by the arbitrator.