PROCEDURES FOR LISTING COMPANIES ON A STOCK EXCHANGE (NSE & BSE)

1. PROCEDURES FOR LISTING
COMPANIES ON A STOCK
EXCHANGE
A project by: Raushan Kumar Pandey
Reg. No. : 1481CMD108
Adarsh Institute of Management & Information Technology

2. ABSTRACT
 The study conducted to know the norms and criteria set for a
company to get listed on the Indian Stock Exchange. The
study also helps in understanding the listing guidelines set by
SEBI and calculation of Indices like, Sensex (an index of
BSE) and Nifty (an index of NSE).
 The movement in the stock exchange shows the economic
condition of a country, also the faith of investors in the stock
market. The norms play an important role in listing of
equities on the stock market and protecting the interests of
the investors.
 In this project, the focus is mainly on the listing norms
though; an attempt has been made to understand the Indian
Stock Market and calculation of its index.

3. Introduction
 Stock Exchanges are an organized marketplace, either corporation or
mutual organization, where members of the organization gather to
trade company stocks or other securities.
 Stock exchanges also facilitates for the issue and redemption of
securities and other financial instruments including the payment of
income and dividends. The trade on an exchange is only by members
and stock broker who have a seat on the exchange.
 The Indian stock market has many stock exchanges, but prominently
the 2 big ones are:
1. National Stock Exchange - Also known as NSE.
2. Bombay Stock Exchange - Also known as BSE, located at the
Dalal Street in Mumbai.
 The Indian stock is being regulated by the regulatory body SEBI.

4. Objectives
 The intention of this study is to get the overview of the
Indian Stock Exchange and also to learn and
understand the basic terms of the Indian Stock
Exchange.
 This study aims to know the benefits, eligibility criteria
& parameters on which the equities are listed on Sensex
(the index of BSE) & Nifty (the index of NSE).
 To explain the scientific methodology and techniques of
calculation of SENSEX and how it changes every
fraction of second by use of formulae.

5. Equities Market
 The securities market has two interdependent and
inseparable segments, the new issues (primary)
market and the stock (secondary) market.
 Primary Market: The primary market provides the
channel for creation and sale of new securities.
 Secondary Market: The secondary market deals in
securities previously issued.

6. BSE
 BSE was established in 1875 as "The Native Share
and Stock Brokers Association".
 First Stock Exchange of the Country which was
recognized in 1956 by the Govt. of India under the
Securities Contracts (Regulation) Act, 1956.
 SENSEX is looked at as one of the biggest parts of
the India stock market. This index consists of 30
blue chips companies.

7. NSE
 NSE is India’s oldest debt market which was
recognized as a stock exchange under the Securities
Contracts (Regulation) Act, 1956 in April 1993.
 NSE was promoted by leading Financial Institutions
at the behest of the Government of India.
 NSE is a well diversified 50 stock index accounting
for 22 sectors of the economy. It is listed as a tax
paying company, while others are not.

8. SEBI (The Regulator)
 Established in the year 1992.
 Responsible for:
 Regulating the business in stock exchanges and any other
securities markets.
 Registration and regulation of a range of financial
intermediaries and trade participants.
 Prohibiting practices that are considered to be unhealthy for
development of the securities market such as insider
trading.
 Inspection and calling for information from various
regulated entities.
 Conducting research

9. Benefits of Listing
 Only listed shares are quoted on the stock exchange.
Listing is beneficial to the company, to the investor,
and to the public at large.
 Fund Raising
 Supervision and Control of Trading in Securities
 Ready Marketability of Security
 Fair Price for the Securities
 Timely Disclosure of Corporate Information
 Collateral Value of Securities
 Better Corporate Practice
 Benefits to the Public

10. Minimum Listing Requirements for New Companies
(BSE)
 The minimum market capitalization of the Company.
 The minimum issue size
 The applicant, promoters compliance of the listing
agreement.

11. Minimum Listing Requirements for New Companies
(NSE)
 Paid up Capital
 Atleast three years track record of either
 Redressal Mechanism of Investor grievance
 Distribution of shareholding pattern
 Details of Litigation
 Track Record of Director(s) of the Company
 Change in Control of a Company/ Utilization of funds
raised from public
 Dividend / Distributable Profit Track Record Test
 Listing on Other Exchanges

12. The Listing Procedure
 Submission of Letter of Application
 Permission to Use the Name of BSE in an Issuer
Company's Prospectus
 Listing Agreement
 Allotment of Securities
 Trading Permission
 Requirement of 1% Security deposit
 Payment of Listing Fees
 Compliance with the Listing Agreement

13. SENSEX
 The Sensex comprises of 30 prominent stocks
derived from all key sectors which are traded
actively in the exchange. Thus, the Sensex truly
reflects the movement of the Indian stock markets.
 Calculation Methodology : Free Float market
capitalization
 Free-float market capitalization of the index
constituents is derived by applying IWFs

14. Sensex is calculated through the following steps:
 The market capitalization of each of the 30
companies
 the free-float market capitalization
 Index Calculation
 Sensex value = Current free-float market value of
constituents stocks/Index Divisor

15. Findings
 The recognition of BSE as India’s first stock Exchange.
 The evolution of Indian Stock Exchange.
 Factors responsible for creation of NSE
 The recognition of BSE as India’s first stock Exchange.
 The norms and guidelines set by the regulator SEBI for
listing of equities of new companies, IPOs, direct listing.
 Calculation of SENSEX on real time basis.

16. Suggestions
 BSE has more than 2800 equities listed but all are not in
investors’ interest many of them are promoters driven. Small
investors get trapped in those equities so SEBI should
formulate certain rules to protect the small & retail investor.
 The equities which are listed on BSE but not on NSE should
be traced because most of such equities are highly volatile,
small and retail investors lose their money in such stocks.
Rules for such companies should be tightened.
 SENSEX & NIFTY should be reviewed at certain period of
time also the index should be expanded as numbers of
companies are increasing.
 Certain norms & guidelines should be introduced to take

17. Conclusion
To maintain the economic growth of a country the stock
exchange of a country has to keep performing as it
shows the economic growth of a country and the faith of
investors in a country. The stock exchange of India is at
a new high and the investors are very positive about
Indian market. The market is providing the right
opportunity to strengthen its roots and policies.
Basically the companies who have large debt are going
for equities but certain rules should be formulated so
that the startups with potential can get easy access to
raise capital via equities. The rules should be such that it
attracts both domestic and foreign investments.
Hence, I conclude that the Indian Stock Exchange is
compacted with rules and regulations. The exchange
should introduce some rules as well as eradicate certain

18. Thank You