PROS OF LISTING A COMPANY ON THE STOCK MARKET

WHAT DOES GETTING A COMPANY LISTED REALLY MEAN? 

Listing refers to a shares of a company being formally admitted to the Exchange's trading platform. It is a major turning point in a company's growth and development. It helps a business to raise money while enhancing its foundation and standing. In addition to ensuring effective compliance monitoring of the issuer and trading of the securities in the benefit of investors, it offers liquidity to investors. An Initial Public Offering (IPO) on the stock exchange is one way for a business to raise funds (IPO). This is a call to action for the general public to contribute to the business and buy shares in it on their own behalf.

The following are some of the typical justifications and advantages for a corporation to be listed:

 Wider financial access

Obtaining sufficient funding to achieve one's objectives and, ultimately, increase profits for one's owners, is the very reason for launching a firm. The company has the opportunity to raise a significant amount of money by going public on a reputable stock market since it has access to a larger pool of possible investors, both institutional and retail.

The capacity to raise additional funds when necessary

 Any business will eventually need to raise capital. A firm that lists on the stock exchange has the ability to raise money whenever it is needed by issuing additional shares, either of a new class or a rights issue of the existing class of shares, at its discretion.

Greater exposure in the market

A company gains exposure when it is listed on a reputable stock market, mostly to institutional investors rather than just ordinary ones. By displaying its business and growth plan and sound financials, the company has a chance to entice investments from foreign investors. The company can occasionally generate the needed finances thanks to its improved awareness in the domestic and global markets.

Greater investor assurance

 The strict rules that must be observed by a company during the listing process and afterward, even in the event of the firm's winding up, serve a dual purpose for the company and its stakeholders. Higher investor trust in the viability and profitability of their investment is a result of enhanced openness. In addition, it enables the business to develop and uphold its high level of trust by using a disciplined method. 

Exit strategy for current investors

Many stakeholders, including the company's promoters and private investors, own shares in private corporations. Listing on the stock exchange can provide these investors with a solution if they desire to partially or entirely liquidate their share. The company's current shareholders may sell their shares to the general public by putting their shares up for sale in an offer for sale (OFS). Existing shareholders might choose a method of exit through listing.

Motivating employees through ESOPS

When a business is listed on the exchange, it can utilize its shares to recruit employees through ESOPS (Employee Stock Ownership Plans). This raises the likelihood of hiring qualified people and lowers the financial pay and retention costs for an employee.

The main distinctions between listed companies and unlisted companies

After defining the terms, we'll talk about how listed companies and unlisted companies differ from one another:

• When a corporation issues securities to the public and those securities are quoted on one or more reputable stock exchanges, such company is considered to be listed. An unlisted firm, on the other hand, is one whose securities do not appear on the list of the stock exchange

• Unlisted corporations must comply to the rules and regulations set forth by the Ministry of Corporate Affairs and the Central Government, whereas listed companies must follow the SEBI's norms and regulations.

• Unlisted businesses are owned by private individuals, as opposed to publicly traded companies, which have many stockholders. Because listed companies have access to a ready market, the securities are quite liquid in terms of liquidity. In contrast, the securities of unlisted corporations are illiquid because there isn't a ready market for them.

• The stock prices of listed firms are easily accessible since they are traded daily and quoted on the stock exchange, which is subject to the dynamics of supply and demand in the market. This makes it simple to ascertain the market worth. Contrarily, the estimated market value of securities of an unlisted firm is established on the basis of several criteria due to the lack of appropriate information.

• Listed companies experience considerable volatility, which reflects general market sentiment. Contrarily, unlisted companies experience little volatility, and their price is determined by their estimated capital value.