Listing (finance)
Encyclopedia
In corporate finance
, a listing refers to the company's shares being on the list (or board) of stocks
that are officially traded on a stock exchange
. Normally the issuing company is the one that applies for a listing but in some countries the exchange can list a company, for instance because its stock is already being actively traded via informal channels. Initial listing requirements usually include a history of a few years of financial statement
s (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. Stocks whose market value and/or turnover fall below critical levels can get officially delisted; delisting is often the result of a merger or takeover
, or the firm going private.
of a company from a stock exchange
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
, no longer satisfies the listing rules of stock exchange, or has become a private company 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. 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
.
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
, a listing refers to the company's shares being on the list (or board) of stocks
Stocks
Stocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
that are officially traded on a stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
. Normally the issuing company is the one that applies for a listing but in some countries the exchange can list a company, for instance because its stock is already being actively traded via informal channels. Initial listing requirements usually include a history of a few years of financial statement
Financial statement
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
s (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. Stocks whose market value and/or turnover fall below critical levels can get officially delisted; delisting is often the result of a merger or takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
, or the firm going private.
Delisting
Delisting refers to the practice of moving in the stockStock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
of a company from a stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
so that investors can no longer trade shares of the stock on that exchange. This typically occurs when a company goes out of business
Liquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
, declares bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
, no longer satisfies the listing rules of stock exchange, or has become a private company after a merger or acquisition
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
, 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. 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
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....
markets like the OTC Bulletin Board
OTC Bulletin Board
The OTC Bulletin Board or OTCBB is an interdealer electronic quotation system in the United States that displays real-time quotes, last-sale prices, and volume information for many over-the-counter equity securities that are not listed on the NASDAQ stock exchange or a national securities exchange...
or the Pink Sheets
Pink Sheets
OTC Markets Group, Inc., informally known as "Pink Sheets", is a private company that provides services to the U.S. over-the-counter securities market including electronic quotations, trading, messaging, and information platforms. According to the U.S. Securities and Exchange Commission, OTC...
.