The journey of a company entering the stock exchange is often complex, but the true advantages of this move are not known to most people. Listed companies indeed relish significantly more exposure compared to their unlisted counterparts. Both listed and unlisted companies come with their unique merits and demerits, distinguishing them on various fronts. Nonetheless, their fundamental objective remains consistent i.e., maximising profit. Hence, in this article, we see how the decision to list on the stock exchange can propel your business and the benefits of listing company on stock exchange.
Understanding Stock Exchange and Listed Company
Before discussing the benefits of listing company on stock exchange, let us understand the concept of stock exchange and listed company first.
Meaning of Stock Exchange
A stock exchange serves as a fundamental marketplace where a diverse range of financial instruments such as stocks, commodities, etc. are actively bought and sold. It acts as a vital platform for companies to engage in trading their stocks, contingent upon their listing on the exchange. In India, the most important stock exchanges are the Bombay Stock Exchange and the National Stock Exchange.
It’s crucial to note that a stock exchange does not own the stocks. Rather, it serves as a medium that allows companies and entities to trade stocks. Analogously, it operates like a vegetable market where buyers purchase vegetables from sellers at a particular location, although the market itself doesn’t possess the vegetables.
Meaning of Listed Company
A listed company is one that has its shares available for public trading, quoted, and officially listed on a recognised stock exchange. These companies are required to strictly adhere to the specific listing requirements set forth by the exchange. These requirements often encompass factors such as a minimum earnings level and a specified number of shares to be listed on the stock exchange.
Typically, listed companies initiate their public presence through an IPO, during which they offer shares to the public, raising capital in return.
In India, for instance, the Bombay Stock Exchange lists a vast number of over 600 companies, underscoring the substantial presence and influence of these listed entities within the stock market.
List of Stock Exchanges in India
In India, there are a total 6 stock exchanges of which three are permanent in nature. The list is given below:
| Serial No. | Name |
| 1. | BSE or Bombay Stock Exchange Ltd. |
| 2. | Calcutta Stock Exchange Ltd. |
| 3. | India International Exchange or India INX |
| 4. | Metropolitan Stock Exchange of India Limited |
| 5. | National Stock Exchange of India Ltd. |
| 6. | NSE IFSC Ltd. |
What are the Top Ten Benefits of Listing Company on Stock Exchange in India?
The benefits of listing company on stock exchange in the country are:
1. Boosted Profile
One of the primary benefits of listing a company on the stock exchange is that it enhances a company’s profile, making it more visible and recognisable, attracting new customers and clients, and garnering media attention.
2. Access to Capital
Listed companies can easily raise affordable capital by issuing shares to investors, facilitating business growth and covering various costs.
3. Collateral Value of Securities
Listed securities are accepted as collateral for credit facilities, and listed companies enjoy favorable ratings from lenders, enabling them to secure financing easily.
4. Capacity to Uphold Control
Listed companies maintain greater control and independence compared to venture-funded firms, as public shareholders have limited rights.
5. Liquidity
Listing improves liquidity by allowing shareholders to realise their investment value and trade shares, sharing risks and benefiting from organisational value increases.
6. Transparency and Efficiency
Listing promotes transparency and efficiency, requiring accountability toward shareholders and timely compliance with regulatory guidelines.
7. Enhanced Visibility
Public listing enhances a company’s credibility and visibility among institutions and the investing public, fostering transparency in operations.
8. High Returns
Stock exchange listing offers the potential for higher returns over the long term, despite the inherent risks, making it a valuable benefit.
9. Increased Exposure
Listed companies receive greater exposure through IPOs, attracting investor interest and contributing to growth.
10. Increased Accountability
Listed companies uphold strict financial accountability, adhering to exchange rules, promoting transparency in business dealings, and ensuring accountability for company actions.
There are many benefits of listing company on stock exchange, ranging from improved visibility and access to capital to enhanced transparency and accountability, making it an appealing option for companies seeking growth and success.
Final Thoughts
Thus, we can conclude that the benefits of listing company on stock exchange India are manifold, including more visibility, capital accessibility, etc. Adhering to rigorous regulatory standards and promoting transparency, listed companies instil trust in investors, potentially resulting in amplified returns.
In a competitive business environment, stock exchange listing can serve as a strategic move, opening doors to new opportunities and strengthening a company’s market position. Overall, the benefits of stock exchange listing make it an attractive option for companies seeking to thrive in India’s dynamic economic landscape.
