Qualifications and Process of Listing Shares in a Stock Exchange

Neethi V. Kannanth | Last updated: 08 March 2022

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Quick Summary

Listing shares on a stock exchange, typically through an Initial Public Offering (IPO), allows unlisted companies to sell securities to the public. To qualify, a company must be registered as a public entity, meet specific paid-up capital and market capitalisation thresholds (e.g., £10 crore paid-up capital, £25 crore capitalisation), and adhere to various regulations. A minimum three-year track record, positive net worth (unless the issue size exceeds £500 crore), and a robust investor grievance redressal mechanism are also crucial. The listing process involves filing documents with the stock exchange, obtaining in-principle approval, opening the issue for subscription, and finally, listing the shares on the exchange.

The procedure through which an unlisted company, a start-up or an early stage corporation can be listed on the stock exchange for trade or sale of its securities to the general public in the primary market is known as Initial Public Offering(IPO). Qualifications for listing Initial Public Offerin

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FAQ :

An Initial Public Offering (IPO) is the procedure by which an unlisted company can list its shares on a stock exchange, allowing it to sell securities to the general public in the primary market.

The applicant's paid-up equity capital must not be less than £10 crores, and its equity capitalisation must not be less than £25 crores. Post-issue figures are used for these calculations.

Yes, the applicant must have at least a three-year track record. This can be the applicant company itself, its promoters, or a converted partnership firm, provided certain conditions are met.

The company must have a positive net worth (unless the issue size is over £500 crores), must not have been referred to BIFR, and no insolvency or winding-up proceedings should have been admitted against the issuer or its promoters.

The stock exchange assesses details of pending investor grievances against the issuer and its group companies, and reviews the arrangements in place for resolving such grievances, including through the SEBI Complaints Redress System.

The process involves filing draft offer documents, applying on the exchange's platform, obtaining in-principle approval, opening the issue for subscription, submitting post-issue documents, and finally, the shares are listed on the exchange.