Benefits of Listing on Stock Exchange

Listing is the formal admission of securities/shares of a company to the trading platform of the Stock Exchange. In Layman terms the company’s shares, debentures etc get listed on a particular Stock Exchange and investors can buy in a share also called Equity. So now that we have understanding of the term Listing, let’s get straight to the benefits.

There are several benefits of listing, out of which mostly are as follows –

1. Access to Capital for Growth – As shares in the Stock Exchange, it allows Management to raise larger sum of money. Most companies reach a level wherein additional capital is required to be infused to fund the company’s growth/expansion plans. Therefore, going public helps to overcome these constraints thereby enabling the company to increase its shareholder base which enhances the credibility.
   
   
2. Enhanced Visibility – Going public improves company’s Visibility, Trustworthiness and Reputation among institutions and the investors due to complying with various regulatory norms and ensuring transparency while conducting operations. A listed company attracts the attention of Hedge Funds, Mutual Funds and Institutional Investors.
   
   
3. Increase in Employee Morale – Increased Visibility and Tangibility at the same time improved Public Perception of the Organisation, thereby leads to reinforcement of employee’s value and morale.
   
   
4. Transparency and efficiency - Listing brings transparency and efficiency in the overall operations of the company. The board and management team of a listed company has accountability towards it shareholders. Further, listed companies also need to ensure timely compliance by providing information / disclosure to the Exchange / shareholders as laid down in the Listing Agreement or applicable guidelines.
   
   
5. Liquidity - Listing stimulates liquidity, giving shareholders the opportunity to realize the value of their investments. It allows shareholders to transact in the shares of the company, sharing risks as well as benefitting from any increase in the organizational value.

By complying with the Listing requirements, the operations of the Company becomes more Transparent and Investor Friendly, It further boosts up the Reputation and Prominence of the Company.