12.5.4 Listing of the Shares on a Stock Exchange

Shares of a public company may be sold or purchased on stock exchange. But for this purpose the company has to get permission from the stock exchange authorities. Section 73 provides that it is necessary for every public company, before issuing shares or debentures for public subscription by issue of a prospectus, to make an application for listing the security in one or more recognised stock exchanges. This is known as listing of the shares. The information that permission has been obtained from the stock exchange or that an application for getting permission has been made or will be made, may be mentioned in the prospectus.

The eligibility criteria for listing of securities of a company is:

            (i) minimum issued equity capital of a company should be Rs 3 crores; and

            (ii) the minimum public offer of equity capital shall be not less than 25%     [Rule 19(2)].

For listing of its shares, the company has to comply with all the requirements of the Securities Contracts (Regulation) Rules, 1957 . Rule 19(2) (b), requires that at least 25% of each class or kind of securities issued by the company shall be offered for public subscription through newspaper advertisement for a period not less than 3 days and that allotment to such applicants shall be made fairly and unconditionally.