Overview
Listing refers to the process of adding a company’s shares to the stock exchange. When a company is listed, its shares can be traded officially in the stock market. In most of the countries, a company applies for a listing but in some other places, a stock exchange can list a company even if its shares have already been traded through any informal channels and ways.
How Listing Works
A firm has to fulfill some guidelines and criteria as laid down by the stock exchange to be listed. These may differ based on the stock market and can also encompass financial performance, size of the company and transparency in the company’s operations. Once listed, investors can buy or sell its shares publicly. This facilitates easy raising of funds for business expansion.
Advantages of Listing
Although there are many advantages of having a company quoted on the stock exchange market, but some of them are:
- Access to capital: A listed company can raise capital by issuing shares to the public, and hence it can develop and grow.
- More Trust: Listing is more trustworthy, hence more investors and customers believe in the company.
- Improved Visibility: The firm receives visibility, which can enhance its presence in the market.
Challenges of Listing
Even though there are advantages, listing poses some difficulties:
- Stringent Requirements: Companies have to fulfill numerous financial and legal requirements.
- High Expenses: The procedure entails costs such as registration fees and legal fees.
Conclusion
Listing a company on the stock market exchange can provide growth opportunities but it requires the company to meet its strict rules and manage high costs. This can hence be challenging for small businesses.