Just like NSE (National Stock Exchange) has its listing requirements, BSE (Bombay Stock Exchange) too has laid out certain requirements for a company to get listed. When a company gets listed on BSE, it can enjoy various benefits such as:
- Brings in liquidity and ready marketability of securities
- Increases the company’s ability to raise capital
- Supervises and monitors trading of securities
- Generates fair price for the company’s security
- Provides more transparency about the company’s activities and thus gains investors’ confidence
There are 2 broad ways through which a company can get listed on BSE:
- New Listing (IPO/FPO)
IPO is a process by which a company offers its shares to the public for the first time, and FPO is the process in which a company already listed on the stock exchange issues new shares either to the existing shareholders or to the new investors.
- Direct Listing
The process in which a company already listed on any other stock exchange(s) approaches BSE to get its shares listed is known as Direct Listing. Currently, a direct listing is divided into further sub-categories, as mentioned below.
- Companies listed on the nationwide Stock Exchange having an average daily turnover of more than Rs 500 crore in the equity segment in the immediate preceding Financial Year, seeking listing under Direct Listing at BSE (Read more: https://www.bseindia.com/downloads1/DLNorms_Co_Listed_on_NationwideSE_March2022.pdf)
- Companies listed on recognized stock exchange / nationwide stock exchange having average daily turnover less than Rs. 500 crore in equity segment in immediate preceding Financial Year/ Companies which are on Dissemination Board of the Exchanges having nationwide terminals (Read more: https://www.bseindia.com/downloads1/DL_Norms_CO_Listed_SE_TO_less_than_500cr_March2022.pdf)
- Companies listed on the SME platform of other stock exchange and seeking listing at BSE under Direct Listing at the time of simultaneously migrating to Main Board at that stock exchange (Read more: https://www.bseindia.com/downloads1/DL_of_Co_Listed_on_NationwideSE_SMEPlatform_June21_2021Category_C.pdf)
- Companies listed on other Nationwide Stock Exchanges which were initially listed on SME platform and seeking listing at BSE under Direct Listing (Read more: https://www.bseindia.com/downloads1/DL_of_Co_Listed_on_NationwideSE_February152021CategoryD.pdf)
Please note that each of the above-mentioned ways has its own set of eligibility criteria that a company needs to fulfill in order to enjoy the listing benefits. However, in this article, we will see the eligibility criteria for the New Listing through IPO/FPO method.
Before we proceed further, let’s take a look at the listing through IPO stats for BSE for the past 5 years. This will help you understand how more and more companies have started getting themselves listed on BSE through IPO.
|Year||Total IPOs||IPOs on BSE Main Board||IPOs on BSE SME Segment|
BSE listing requirements for New Listing through IPO/FPO
*Market capitalization = post-issue paid-up number of equity shares * issue price
Other important requirements that a company needs to fulfill:
- Should get the permission to use the name of BSE in their prospectus
- Should submit a Letter of Application to all the stock exchanges where it plans to list its securities before filing the prospectus
- Should complete the allotment of securities (offered to the public) within 30 days of the closure of the subscription list (in case of book building, allotment shall not be made later than 15 days of the closing of the issue)
- Should complete trading formalities within 7 days from the finalization of allotment at all the stock exchanges where the applicant has applied
- Should deposit 1% of the issue amount with the designated stock exchange before the issue opens
Ease of settlement, liquidity, transparency, enhanced visibility, and more are a few of the benefits that a company can avail of by getting listed on stock exchanges. Please note that to get a company listed on BSE, the applicant needs to fulfill the BSE listing requirements. Apart from that, the BSE listing process also needs the applicant to comply with every other requirement like documentation and payment of prescribed fees. Once the company is successfully listed on BSE, as an investor, you can start trading in its securities.
Disclaimer: This blog is exclusively for educational purposes