Did you know selling shares on a stock market assists you in enhancing capital? Also, it’s a significant mark of reputation. So, if you want your company to be listed in the Indian stock market, that firm needs to list its entire securities on the stock exchange for stock market trading.
Moreover, that company needs to meet all the terms and conditions mentioned in the companies guidelines. As you can’t quickly start selling stock in your firm, it calls for a listing. It’s quite a matter of considerable pride for any organization to go public.
So, various definite procedures are there that a company requires to come out with an IPO or Initial Public Offering. However, numerous legal steps are primarily needed for this IPO. Therefore, before you start trading, you need to navigate the stock exchange process.
So, without further ado, let’s check out the procedures of listing companies, conditions, and diverse types of securities listing in the Indian stock market!
How to List Company in Stock Market India?
1. Finding an Underwriter
You should deploy a professional underwriter to take measures as the powerful intermediary between your investors and the company. The function of the underwriters acts as the powerful risk analyzers of the financial world. Moreover, the investors rely on them to ascertain whether it’s worthy of taking a business risk.
Your underwriter should accord with assuming the risk of purchasing the entire stock inventory before you can list your own in the stock market. Furthermore, they must take the risk of buying the stocks on behalf of your firm prior to selling them to the public.
However, the devotion takes the form of an underwriting agreement. So, once you are done with your underwriting agreement, the underwriter drafts a program to showcase the prospective investors in order to obtain excitement.
2. Assigning an Investment Bank
All the major Indian banks, private or public, have a significant investment division taking good care of the IPO procedure. Therefore, you have to do is to arrange a meeting with any of the prestigious banks and pay their necessary fees to continue. After that, it will be the bank’s job to make your company public.
Advertising means everything starting from setting up hoarding to offering interviews to magazines and news channels. So, the more your organization is renowned and discussed among the market, the highest demand it will garner from the investors.
Therefore, it, in turn, will assist in a reasonable listing price in lieu of the exchanges. So, heavy advertising helps your company to promote and lure investors.
4. Standards of Exchange Listing
The premium stock exchanges, like exclusive clubs, never accept any random company listed on the stock market. Therefore, the listing requirements have to meet while listing companies in the stock market in India.
These include the total number of shares, initial stock price, entire market value, and the total number of shareholders. Once you begin trading on an exchange, you need to fulfill less rigid standards to stay in the loop. If not, the exchange listing may drop the stocks.
5. Registration forms to SEBI
SEBI, or Securities Exchange Board of India, is a self-governing body that modulates India’s whole investment and finance markets. Therefore, the in-depth purpose of SEBI is to offer protection and transparency from the investor.
However, every IPO needs to register with SEBI necessarily. So, once the company gets sanctioned, the IPO is ready to get featured on the Indian stock exchanges.
Different Types of Security Listings
- Public Issue: After enlisting your company in the Indian stock market, that company and its share will come out with a major public issue.
- Listing for combination: The associated company furnishes new shares to the shareholder of the combined company.
- Initial Listing: Initial listing is the best type when a company’s share gets listed for the first-ever time in the stock exchange.
- Right Issue: After enlisting a company’s share in the Indian stock market, it issues major shares to its existing shareholders.
- Bonus Shares: When a listed organization issues bonus shares to its existing shareholders for maximizing its profits.
Significant Conditions for Shares Listing
Before getting enlisted in the Indian stock market, the company needs to follow specific terms and conditions for share listing.
- The significant requirement is Rs. 3 Crores, from where the 1.8 Crores needs to be provided to the public.
- Approximately 25% of securities should be given as a company’s share will be offered to the public via a prospectus.
- A leading requirement of approximately 5 public shareholders is there concerning every Rs. 1 lakh of the newest issue of capital and 10 shareholders for every Rs. 1 lakh of the existing capital.
- The receipt of the application, date of opening of the subscription, and other major details must be provided in the prospectus.
- Those firms with paid-up share capital of over Rs. 5 Crores can get themselves registered in the accredited stock exchange.
- The leading capital structure of the company must be broad enough and the company securities must be in the public interest.
- The secretary or the company’s auditor needs to proclaim that the share certificate has been imprinted for listing. That’s why the shares of the promoter’s quota can’t be transferred or sold for 5 years.
- Supposing the huge application money, the firm needs to pay 4-15% interest. In case of any significant delay, while refunding, the delay limit must not exceed 10 weeks starting from the date of subscription list closure.
Hopefully, this article provides all the major procedures for listing companies in the Indian stock market. The 5 processes mentioned earlier of share listing are crucial enough if you also want your company to get enlisted.
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