The Procedure of Listing of Securities on a stock exchange is a crucial component of the global economy, not just a business move. It serves as an essential conduit between businesses looking for investment and investors looking for profitable ways to allocate their funds. 

Qualifications for Listing of Securities

The following are the prerequisites for companies to be eligible for listing of securities:

Net Worth

The business needs to meet the SEBI-mandated minimum net worth requirements. The minimum net worth required could fluctuate based on which stock exchange is selected for listing.

Profitability 

Fintech businesses must demonstrate a track record of financial success in order to be considered profitable. Usually, this means meeting a minimum profit threshold for the three years prior. As an alternative, these businesses can demonstrate their eligibility by providing a combined positive net worth for the three years prior to the present.

Promoter Contribution 

According to SEBI regulations, the company’s promoters must own a minimum proportion of the equity shares. This requirement was put in place to highlight the promoters’ significant financial interest in the company’s success.

Public Shareholding 

Under SEBI regulations, a minimum percentage of the company’s shares must be held by the public. This encourages more share ownership and market liquidity.

SEBI Regulation Compliance

The business needs to abide by all SEBI rules and policies that apply to Fintech businesses.

Documents for the Listing of Shares

In order for a public company to list its shares on a stock exchange, it must submit the following documents:

• a certified copy of the association’s memorandum and articles;
• Prospectus and underwriters’ agreement;
• Specifics of the Capital Structure;
• copies of advertisements over the previous five years that offered securities;
• copies of the last five years’ worth of financial statements and the auditor’s report;
• a copy of the regret letter, the allotment letter, and the shares and debentures;
• Information on the company’s history since it was incorporated, such as adjustments to the capital structure and borrowings.
• Information on shares or debentures that were issued for an amount other than cash;
• a declaration outlining the share distribution process and providing additional details about commissions, brokerage fees, discounts, and other conditions of the share offering;
• a financial institution agreement, if applicable;
• information on forfeited shares;
• Specifics of the securities for which a request for authorization to deal is made;
• a copy of SEBI’s approval.

The procedure of listing of securities on a stock exchange

A systematic process needs to be adhered to for listing of securities on the stock market:

1. First, a recognized stock exchange must receive an application from the company. This process is outlined in section 73 of the Companies Act of 1956, which states that a public limited company must apply, along with the required documentation, to the national stock exchange in order to list its securities there. The stock market may request any necessary missing documents, and the company will have ten working days to provide them.
2. Subsequently, the stock market will review the company’s financial records to ensure compliance. The listing company and the stock exchange agree if the stock exchange approves the listing firm’s application.
3. The listed business must agree to all terms and conditions and abide by SEBI regulations as well as the rules and guidelines of the stock market where it is registered.
4. The company must pay a yearly listing fee based on the business’s paid-up capital.
5. In order to be admitted to the stock exchange, a firm must pay a security deposit, which the stock exchange has the right to seize if the company doesn’t pay dividends on time, transfers securities slowly, etc.
6. When a firm completes all the requirements within the time frame specified by the SEBI Regulations, 2009, it is eventually granted admission to trade on the stock market.

Following the well-defined procedure for listing of securities outlined in this article and meeting the required eligibility requirements would enable Lawgical Adda to navigate the shares listing process in India with ease. By doing this, they can bring the dynamic Indian market’s latent possibility of development and growth to action.