Listing (finance)

In corporate finance, a listing refers to the company's shares being on the list (or board) of stock that are publicly listed. Some stock exchanges allow shares of a foreign company to be listed and may allow dual listing, subject to conditions.

Normally the issuing company is the one that applies for a listing but in some countries^[which?] an exchange can list a company, for instance because its stock is already being traded via informal channels.

Stocks whose market value and/or turnover fall below certain levels may be delisted by the exchange. Delisting often arises from a merger or takeover, or the company going private.

Requirements

Each stock exchange has its own listing requirements or rules. Initial listing requirements usually include supplying a history of a few years of financial statements (not required for "alternative" markets targeting young firms); a sufficient size of the amount being placed among the general public (the free float), both in absolute terms and as a percentage of the total outstanding stock; an approved prospectus, usually including opinions from independent assessors, and so on.

Examples

The listing requirements imposed by some stock exchanges include:

• New York Stock Exchange: the New York Stock Exchange (NYSE) requires a company to have issued at least one million shares of stock worth $100 million and must have earned more than $10 million over the last three years.^[1]
• NASDAQ Stock Exchange: NASDAQ requires a company to have issued at least 1.25 million shares of stock worth at least $70 million and must have earned more than $11 million over the last three years.^[2]
• London Stock Exchange: the main market of the London Stock Exchange requires a minimum market capitalization of £700,000, three years of audited financial statements, a minimum public float of 25% and sufficient working capital for at least 12 months from the date of listing.
• Bombay Stock Exchange: the Bombay Stock Exchange (BSE) requires a minimum market capitalization of ₹250 million (US$3.0 million) and minimum public float equivalent to ₹100 million (US$1.2 million).^[3]

Delisting

Delisting refers to the practice of removing the capital stock of a company from a stock exchange so that investors can no longer trade shares of the stock on that exchange. This typically occurs when a company goes out of business, declares bankruptcy, no longer satisfies the listing rules of the stock exchange, has become a private company, has become a subsidiary after a merger or acquisition, or wants to reduce regulatory reporting complexities and overhead, or if the trading volumes on the exchange from which it wishes to delist are below minimum thresholds.^[4]

In the United States, securities which have been delisted from a major exchange for reasons other than going private or liquidating may be traded on over-the-counter markets like the OTC Bulletin Board or the Pink Sheets.