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Unit 6: Secondary Market

been afoot to revitalise it. In fact, as of now, BSE and NSE are the two Stock Exchanges, which Notes
enjoy nation-wide coverage and handle most of the business in securities in the country.

6.4 Listing of Securities

Listing of securities, on a stock exchange, allows them to be traded there under an agreement
between the exchange and the issuer of the stocks. Provisions of section 73(1) of the Companies
Act 1956, as amended in 1988 set the regulatory framework in India for listing at the stock
exchanges. Besides this, there are the provisions of the Securities Contracts (Regulation) Act
1956, which confers powers on a stock exchange. Securities, offered to the public for subscription,
have to be listed on a stock exchange. For this the stock exchange and/or the regulatory authority
may require certain criteria to be satisfied, such as disclosure norms, names of the exchanges at
which listings are sought, eligibility for an IPO, post-issue capital, promoters' minimum
contribution and lock-in period for the same, minimum offer to public for subscription, pricing
of the issue and credit rating.
Listing, a security on the stock exchange, instills a sense of confidence in the investing public, by
signaling that the company has complied with certain basic requirements which govern among
other things, administration of share certificates, registration of transfer of shares and new
issues. These compliances are likely to create an environment conducive to wider investor
participation and therefore, liquidity.
Stocks and bonds are traded on the stock exchanges. The two largest stock exchanges of the
country are the Bombay Stock Exchange (BSE), Mumbai and the National Stock Exchange (NSE),
New Delhi. Although it is not obligatory for stocks to be listed on a stock exchange, it becomes
so, if the company declares in the prospectus, that it will seek listing.
The listing regulations are uniform for all stock exchanges in this country. Companies seeking
listing of securities must meet conditions of minimum public offer, minimum issued capital,
payment of interest on excess application money if not returned within 30 days from date of
closure of the issue, maximum expenses permissible for an issue, restrictions on advertising,
face value of shares, bonds and debentures, publication of half yearly results and its notification
to the exchange. The application for listing, must be accompanied by a number of documents.
The company is required to pay listing fees, which may vary from exchange to exchange.
Listing means the admission of securities of a company to trading privileges on the floor of a
stock exchange. The principal objectives of listing are to:
1. Provide ready marketability and impart liquidity and free transferability to securities;
2. Ensure proper supervision and control of dealings therein; and

3. Protect the interest of shareholders and the general investing public. According to Section
73(1) of the Companies Act, every company intending to offer shares/debentures to the
public for subscription by the issue of prospectus should make an application to recognized
stock exchange(s) for permission to deal in them. Any allotment of shares/debentures
would be void if the permission has not been granted by the stock exchange before the
expiry of 10 weeks from the date of closing of the subscription list. The companies issuing
securities to the public should obtain permission from the stock exchange(s) for listing
within the prescribed time.
Conditional listing of companies is not permitted. The listing regulation in India in terms of
(1) delisting of securities and (2) Clause 49: Corporate Governance of the listing agreements are
discussed in Sections 1-2 respectively. Concluding observations are given in the last Section.

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