The main benefits are: (i) It affords liquidity to their holdings. This advantage is also utilised by the management in connection with the acquisition of additional business or assets or mergers with the companies because listing enables it to offer its securities in exchange for those of a closely held or of an unlisted company. The Advantages And Disadvantages Of Listing On The Stock Exchange. 3. Section 81 of the Companies Act provides that any further issue of share, unless waived by them in a general meeting, must in the first instance be offered to the existing shareholders. (iv) Transactions on the Stock Exchange are done by auction bids, so there is no hide or seek about the price at which the investor buys or sells the share. Now listing is made compulsory in case of certain companies. Here are the benefits that most companies listed in the stock exchange enjoy. Content Guidelines 2. Ensuring thus a broadening of share ownership, listing not only brings a company’s shares to the attention of hundreds and thousands of new investors, but also encourages institutional investors to be interested in them. However when a company is listed in a stock exchange it enjoys many benefits compared to when it was a private limited liability company. (vii) Listing gives an added collateral value to the securities held by investors, for banks in making loans and advances prefer a security quoted on the Stock Exchange. Is your business suitable for the stock market? Their prices are volatile, fluctuating erratically. Report a Violation, Legal Control on Stock Exchanges of India, Stock Exchanges: 6 Major Functions of Stock Exchanges, Any Company Intending to Have Its Securities Listed on the Exchange has to comply with the Following Requirements. If such listing is not granted or applied for then the company must return all money to the applicants. (vi) The investors get maximum protection in regard to their holdings, because the Stock Exchange rules and regulations have been formulated with the end in view. 0800 181 4422. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. Image Courtesy : realtimedatasolution.com/wp-content/uploads/2013/11/Stock-market-may-unstable.jpg. The transfer of shares becomes easier. Being a public company can present a range of benefits to your business, but there are also issues that might require careful consideration. List of Disadvantages of Common Stocks. TOS 7. Even if much of a society's individuals are not directly involved with the stock … Even if your business is suited to flotation, it may not be the right choice for you. Let's first try to understand what a company actually does by listing, in layman terms the company's shares, debentures etc. Even if your business is suited to flotation, it may not be the right choice for you. Plagiarism Prevention 4. Now in the case of a non-listed company, if this right of subscribing to the additional shares is not exercised by the shareholders, the company concerned will be in great difficulty, and will also have to incur great expense in selling them.