In
corporate finance
Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and anal ...
, a listing refers to the company's
shares
In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...
being on the list (or board) of
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
that are officially traded on a
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
. 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 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 critical levels may be delisted by the exchange. Delisting often arises from a
merger
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
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 a million shares of stock worth $100 million and must have earned more than $10 million over the last three years.
* NASDAQ Stock Exchange:
NASDAQ
The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
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.
* London Stock Exchange: the main market of the
London Stock Exchange requires a minimum market capitalization (£700,000), three years of audited financial statements, minimum public float (25%) and sufficient
working capital for at least 12 months from the date of listing.
* Bombay Stock Exchange:
Bombay Stock Exchange (BSE) requires a minimum market capitalization of and minimum public float equivalent to .
Delisting
Delisting refers to the practice of removing the
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
of a company from a
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
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
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
, 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 stock volumes on the exchange from which it wishes to delist are not significant. Delisting does not necessarily mean a change in company's core strategy.
Allianz to delist from NYSE and European Exchanges
/ref>
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.
References
External links
Nasdaq listing standards and fees
{{stock market
Securities (finance)
Stock market