Submission
of Letter of Application
As
per Section 73 of the Companies Act, 1956, a company seeking listing
of its scrips on an exchange is required to submit a letter of
application to all the stock exchanges where it proposes to have its
shares listed before filing the prospectus with the Registrar of
Companies.
Allotment
of Securities
Most
exchanges stipulate that a company complete allotment of scrips
offered to the public within 30 days of the date of closure of the
subscription list and approach the regional stock exchange that is
the stock exchange nearest its registered office, for approval of the
basis of allotment. In case of a book building issue, allotments are
normally insisted upon not later than 15 days from the closure of the
issue.
Trading
Permission
As
per Securities and Exchange Board of India Guidelines, the issuer
company should complete the formalities for trading at all the stock
exchanges where the securities are to be listed within 7 working days
of finalization of basis of allotment.
A
company should scrupulously adhere to the time limit for allotment of
all securities and dispatch of allotment letters/share certificates
and refund orders and for obtaining the listing permissions of all
the exchanges whose names are stated in its prospectus or offer
documents. In the event of listing permission to a company being
denied by any stock exchange where it had applied for listing of its
securities, it cannot proceed with the allotment of shares. However,
the company may file an appeal before the Securities and Exchange
Board of India under Section 22 of the Securities Contracts
(Regulation) Act, 1956.
Requirement
of 1 per cent Security
The
companies making public issues are generally required to deposit 1
per cent of the issue amount with the regional stock exchange before
the issue opens. This amount is liable to be forfeited in the event
of the company not resolving the complaints of investors regarding
delay in sending refund orders/share certificates, non-payment of
commission to underwriters, brokers and so on.
Payment
of Listing Fees
Most
exchanges require that all listed companies pay an annual listing
fee.
Compliance
with Listing Agreement
The
companies wanting to get their shares listed are normally required to
enter into an agreement with the exchange called the Listing
Agreement. This agreement is of great importance and is executed
under the common seal of a company. Under the Listing Agreement, a
company could undertake, among other things, to provide facilities
for prompt transfer, registration, sub-division and consolidation of
securities; to give proper notice of closure of transfer books and
record dates, to forward copies of unabridged annual reports and
balance sheets to the shareholders, to file distribution schedule
with the exchange annually; to furnish financial results on a
quarterly basis; intimate promptly to the exchange the happenings
which are likely to materially affect the financial performance of
the company and its stock prices, to comply with the conditions of
corporate governance and so on.
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