An Analysis Of Listing Of Securities Commerce Essay

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The listing of companiesin the capital market implies the admission of the shares of that company to dealings on a recognised stock exchange. The securitiesor shares may be of anypublic limited company, Central orstate government, quasi governmental and other financial institutions/corporations, municipalities and so on.

The objectives of listing are to:

  1. Provide liquidity to shares
  2. Mobilize savings foreconomic development
  3. Protect interest of investors by ensuring full disclosures

The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. It recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the beh8est of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly after one year of the launch of Currency Futures.With this, now both the retail and institutional investors can participate in equities, equity derivatives, currency and interest rate derivatives, giving them wide range of products to take care of their evolving needs.


NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of:

  • establishing a nation-wide trading facility for equities, debt instruments and hybrids,
  • ensuring equal access to investors all over the country through an appropriate communication network,
  • providing a fair, efficient and transparent securities market to investors using electronic trading systems,
  • enabling shorter settlement cycles and book entry settlements systems, and
  • meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology have become industry benchmarks and are being emulated by other market participants. It is that force which is guiding the industry towards new horizons and greater opportunities.


The logo of the NSE symbolises a single nationwide securities trading facility ensuring equal and fair access to investors, trading members and issuers all over the country. The initials of the Exchange viz., N, S and E have been etched on the logo and are distinctly visible. The logo symbolizes use of state of the art information technology and satellite connectivity to bring about the change within the securities industry. The logo also symbolises vibrancy and unleashing of creative energy to constantly bring about change through innovation.


NSE has been promoted by leading financial institutions, banks, insurance companies and other financial intermediaries which are given as following:-

  • Industrial Development Bank of India Limited
  • Industrial Finance Corporation of India Limited
  • Life Insurance Corporation of India
  • State Bank of India
  • ICICI Bank Limited
  • IL & FS Trust Company Limited
  • Stock Holding Corporation of India Limited
  • SBI Capital Markets Limited
  • Bank of Baroda
  • Canara Bank
  • General Insurance Corporation of India
  • National Insurance Company Limited
  • The New India Assurance Company Limited
  • The Oriental Insurance Company Limited
  • United India Insurance Company Limited
  • Punjab National Bank
  • Oriental Bank of Commerce
  • Indian Bank
  • Union Bank of India
  • Infrastructure Development Finance Company Ltd.
Now i am taking NHPC Ltd. Company which is listed in NSE. There is two type of listing :-


NHPC is the largest hydroelectric power generating company in the country. It has 13 operating hydro electric power (HEP) plants with an installed capacity of 5,175 MW including two power stations of total 1,520-MW capacity set up through its joint venture subsidiary Narmada Hydroelectric Development Corporation (NHDC).

NHPC is constructing 11 additional hydroelectric projects, which are expected to increase the installed capacity by 4,622 MW. These plants, barring Teesta Low Dam IV, are mostly in the north and northeastern states and scheduled to be commissioned between December 2009 and March 2013.


NSE plays an important role in helping an Indian companies access equity capital, by providing a liquid and well-regulated market. NSE has about 1319 companies listed which includes from hi-tech to heavy industry, software, refinery, public sector units, infrastructure, and financial services. Listing on NSE raises a company's profile among investors in India and abroad. Trade data is distributed worldwide through various news-vending agencies. Each and every NSE listed company is required to satisfy stringent financial, public distribution and management requirements. High listing standards develop investor confidence and also bring credibility into the markets. NSE lists securities in its Capital Market (Equities) segment and its Wholesale Debt Market segment.


Listing means admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement. The prime objective of admission to dealings on the Exchange is to provide liquidity and marketability to securities and provide a mechanism for effective management trading. Listing on NSE provides qualifying companies with the broadest access to investors, the greatest market depth and liquidity, cost-effective access to capital, the highest visibility, the fairest pricing and invester benefits. Securities listed on the Exchange are required to fulfill the eligibility criteria for listing. Various types ofsecuritiesof a company are traded under a unique symbol and different series.


An Issuer has to take various steps prior to making an application for listing its securities on the NSE. These steps are essential to ensure the compliance of certain requirements by the Issuer before listing its securities on the NSE. The various steps to be taken include:

  • Approval of Memorandum and Articles of Association
  • Approval of draft prospectus
  • Submission of Application
  • Listing conditions and requirements

In case company fulfils the criteria, please send the following information for further processing:-

  1. A brief note on the promoters and management.
  2. Company profile.
  3. Copies of the Annual Report for last 3 years.
  4. Copies of the Draft Offer Document.
  5. Memorandum and Article of Association.
Approval of Memorandum and Articles of Association

Rule 19(2) (a) of the Securities Contracts (Regulation) Rules, 1957 requires that the Articles of Association of the Issuer wanting to list its securities must contain provisions as given hereunder.

The Articles of Association of an Issuer shall contain the following provisions namely:

  1. that there shall be no forfeiture of unclaimed dividends before the claim becomes barred by law;
  2. that a common form of transfer shall be used;
  3. that fully paid shares shall be free from all lien and that in the case of partly paid shares the Issuer's lien shall be restricted to moneys called or payable at a fixed time in respect of such shares;
  4. that registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Issuer on any account whatsoever;
  5. that any amount paid up in advance of calls on any share may carry interest but shall not in respect thereof confer a right to dividend or to participate in profits;
  6. that option or right to call of shares shall not be given to any person except with the sanction of the Issuer in general meetings.
  7. permission for Sub-Division/Consolidation of Share Certificate.

It is to be noted that any provision in the Articles of Association which is not in tune with sound corporate practice has to be removed by amending the Articles of Association.

Approval of draft prospectus

The Issuer shall file the draft prospectus and application forms with NSE. The draft prospectus should have been prepared in accordance with the statutes, notifications, circulars, guidelines, etc. governing preparation and issue of prospectus prevailing at the relevant time. The Issuers may particularly bear in mind the provisions of Companies Act, Securities Contracts (Regulation) Act, the SEBI Act and the relevant subordinate legislations. NSE will peruse the draft prospectus only from the point of view of checking whether the draft prospectus is in accordance with the listing requirements, and therefore any approval given by NSE in respect of the draft prospectus should not be construed as approval under any laws, rules, notifications, circulars, guidelines etc. The Issuer should also submit the SEBI acknowledgment card or letter indicating observations on draft prospectus or letter of offer by SEBI.

Draw the Cheques/Demand Drafts favouringNational Stock Exchange of India Limitedpayable at Mumbai.

ISecurity deposit:- Payable only for new and fresh issues and only when NSE is the Regional Stock Exchange.

The Relevant Authority shall not grant admission to dealings of securities of an Issuer which is not listed or of any new issue of securities of an Issuer excepting Mutual Funds, which is listed on the NSE unless the Issuer deposits and keeps deposited with the NSE, as the case may be for ensuring compliance by the Issuer within the prescribed or stipulated period of all requirements and conditions hereinafter mentioned and shall be refundable or forfeitable in the manner hereinafter stated:

  1. The Issuer shall comply with all prevailing requirements of law including and under any notifications, directives and guidelines issued by the Central Government, SEBI or any statutory body or authority acting under the authority or direction of the Central Government and all prevailing listing requirements and conditions of the NSE and of each recognized Stock Exchange where the Issuer has applied for permission for admission to dealings of the securities, within the prescribed or stipulated period.
  2. If the Issuer has complied with all requirements and conditions including, wherever applicable, its obligation under Section 73 of the Companies Act, 1956 and obligations arising therefrom, within the prescribed or stipulated period, and on obtaining a No Objection Certificate from SEBI and submitting it to NSE , NSE shall refund to the Issuer the said deposit without interest within 15 days from the expiry of the prescribed or stipulated period.
  3. If on expiry of the prescribed or stipulated period or the extended period referred to hereafter, the Issuer has not complied with all the aforesaid requirements and conditions, the said deposit shall be forfeited by the NSE and thereupon the same shall vest in the NSE. Provided the forfeiture shall not release the Issuer of its obligation to comply with the aforesaid requirements and conditions.
  4. If the Issuer is unable to complete compliance of the aforesaid requirements and conditions within the prescribed or stipulated period, the NSE, at its discretion and if the Issuer has shown sufficient cause, but without prejudice to the obligations of the Issuer under the laws in force to comply with any such requirements and conditions within the prescribed or stipulated period, may not forfeit the said deposit but may allow such further time to the Issuer as the NSE may deem fit; provided that
  1. the Issuer has at least ten days prior to expiry of the prescribed or stipulated period applied in writing for extension of time to the NSE stating the reasons for non-compliance, and
  2. the Issuer, having been allowed further time by the NSE, has before expiry of the prescribed or stipulated period, published in a manner required by the NSE, the fact of such extension having been allowed; provided further that where the NSE has not allowed extension in writing before expiry of the prescribed or stipulated period, the request for extension shall be deemed to have been refused; provided also that any such extension shall not release the Issuer of its obligations to comply with the aforesaid requirements and conditions.

0. 50% of the above mentioned security deposit should be paid to the NSE in cash. The balance amount can be provided by way of a bank guarantee, in the format prescribed by or acceptable to NSE. The amount to be paid in cash is limited to Rs.3 crores.

II. Issuers applying for admission of their securities to dealings on the NSE shall submit to the NSE the following:

  • Documents and Information:- The documents and information prescribed in Appendix D or Appendix I to this Regulation or such other documents and information as the Relevant Authority may from time to time prescribe, in addition or in modification or substitution thereof together with any other documents and information which the Relevant Authority may require in any particular case.
  • Distribution Schedules:- Distribution Schedules duly completed in respect of each class and kind of security in the form prescribed in Appendix E (Table I, II & III) to this Regulation or in such other form or forms as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof.
Listing conditions and implications:-

All Issuers whose securities are listed on the NSE shall comply with the listing conditions and requirements contained in the Listing Agreement Form appearing in Appendix F to this Regulation or such other conditions and requirements as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof.

B) Listing on WDM segment:-

All Government securities and Treasury bills are deemed to be listed automatically as and when they are issued. Other securities which are issued publicly or placed privately, could be listed or admitted for trading, ifeligible, as per rules of the Exchange by following prescribedprocedure.

Certain securities like Treasury Bills and other securities issued by Government of India and certain Corporate and PSU debt securities available in demat form are eligible for Repo. The market capitalisation of the securities on the WDM segment has been increasing steadily. The segment has also seen a marked increase in the number of securities available for trading other than the traditional instruments like Govt. securities and T-bills.

Procedure and implications for Listing:-
  1. All Listing are subject to compliance with Byelaws, Rules and other requirements framed by the Exchange from time to time in addition to the SEBI and other statutory requirements.
  2. The Issuer of security proposed for listing has to forward an application in the format prescribed in Annexure I of this booklet.
  3. Every issuer, depending on the category and type of security has to submit alongwith application, such supporting documents/information as specified in Annexure I of this booklet and as prescribed by the Exchange from time to time.
  4. On getting an in-principle consent of the exchange the issuer has to enter into a listing agreement in the prescribed format under its common seal.
  5. Upon listing, the Issuer has to comply with all requirements of law, any guidelines/directions of Central Government, other Statutory or local authority.
  6. The Issuer shall also comply with the post listing compliance as laid out in the listing agreement and shall also comply with the rules, bye-laws, regulations and any other guidelines of the Exchange as amended from time to time.
  7. Listing on WDM segment does not imply a listing on CM segment also or vice versa.
  8. If the equity shares of an issuer are listed on other stock exchanges but not listed on Capital Market segment of the Exchange, though eligible, then the debt securities of the said issuer will not be permitted to be listed on the WDM segment.
  9. The Exchange reserves the right to change any of the requirements indicated in this booklet / document without prior notice.


  7. Indian Financial System by P.N.Varshney & D.K.Mittal