Here are the benefits that most companies listed in the stock exchange enjoy. Now listing is made compulsory in case of certain companies. List of Disadvantages of Common Stocks. Benefits of listing a company on the JSE. (iii) It helps them to avoid the botheration of canvassing from door to door to sell the securities. The advantages of listing can be summarized under two heads namely, 1. The advantages derived by the management as a result of listing are many. Advantages 1. Let's first try to understand what a company actually does by listing, in layman terms the company's shares, debentures etc. A stock market is a major component of an economy and has far-reaching effects. Listing is the process of taking a privately-owned organisation and making the transition to a publicly-owned entity whose shares can be traded on a stock exchange, in South Africa that is JSE Ltd. As it was mentioned previously, the … (vii) Listing gives an added collateral value to the securities held by investors, for banks in making loans and advances prefer a security quoted on the Stock Exchange. (ii) . Copyright 10. For these reasons, listing carries the hallmark of prestige and confers on the listed company, its securities and its shareholders a privileged position. (v) The Stock Exchange quotation helps the investors to keep themselves abreast of the price changes of the securities owned or held by them. Advantages of the stock exchange could help you gain interest and keep your business afloat. Being a public company can present a range of benefits to your business, but there are also issues that might require careful consideration. This advantage is also utilised by the management in connection with the acquisition of additional business or assets or mergers with the companies because listing enables it to offer its securities in exchange for those of a closely held or of an unlisted company. The Advantages And Disadvantages Of Listing On The Stock Exchange. Ensuring thus a broadening of share ownership, listing not only brings a company’s shares to the attention of hundreds and thousands of new investors, but also encourages institutional investors to be interested in them. Before investing in any company it is mandatory to review the company’s track record.While there is substantial controlling and financial costs associated with the listing on stock exchange, the advantages outweigh the disadvantages. The main benefits are: (i) It affords liquidity to their holdings. Risks are always associated with investing, but more of these are linked to common stocks. It helps the company to gain national importance and widespread recognition. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. Disclaimer 9. Apart from the distinct advertising value, listing enables the management to broaden and diversify shareholding. Absence of individual intrigue: Organization investors don't take part in the administration of the business. The Central Government after hearing the company can set aside the decision of the stock exchange and order for enlistment or it can confirm the decision of the exchange. 2. Report a Violation, Legal Control on Stock Exchanges of India, Stock Exchanges: 6 Major Functions of Stock Exchanges, Any Company Intending to Have Its Securities Listed on the Exchange has to comply with the Following Requirements. 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Being a public company can present a range of benefits to your business, but there are also issues that might require careful consideration. (iv) Transactions on the Stock Exchange are done by auction bids, so there is no hide or seek about the price at which the investor buys or sells the share. Even if your business is suited to flotation, it may not be the right choice for you. Bedford Square (vi) The investors get maximum protection in regard to their holdings, because the Stock Exchange rules and regulations have been formulated with the end in view. In fact, price determination and value judgements involve constant scrutiny and assessment of each company from business, financial, accounting, legal and technical points of view, and these are primarily the functions of the buyers and sellers in the market. Before publishing your articles on this site, please read the following pages: 1. High risk investment. Privacy Policy 8. Now in the case of a non-listed company, if this right of subscribing to the additional shares is not exercised by the shareholders, the company concerned will be in great difficulty, and will also have to incur great expense in selling them. Section 81 of the Companies Act provides that any further issue of share, unless waived by them in a general meeting, must in the first instance be offered to the existing shareholders. Their prices are volatile, fluctuating erratically. It affords them to obtain the best prices for the securities they want to sell off. (ii) from the point of view of the shareholders. It is the general consensus of opinion that a company with a broad-based share ownership is better suited for growth and stability than a company with shares concentrated in few hands. Listing, thus affords a great advantage to the management in ensuring a saving in the cost of raising new capital. The benefits of stock market flotation could include: However, you should also consider the following potential problems: For further information, the London Stock Exchange highlights what you need to consider if you are interested in flotation. That means a mix of stocks, bonds, and commodities. Advantages of Listing. A mere telephonic or verbal order to a stock broker will help them to buy or sell a listed security. Image Courtesy : realtimedatasolution.com/wp-content/uploads/2013/11/Stock-market-may-unstable.jpg. There is difference between a listed and a non-listed security (particularly from the point of view of the psychological motivation of the investors in applying for subscription to shares) in as much as Section 73 of the Companies Act requires that every company intending to offer shares or debentures to the public for subscription through issue of a prospectus, must seek enlistment with one or more stock exchanges.