
The Stocks are going up”, “The stocks have crashed”. These statements are common to the ear when a company is listed on a stock exchange. Getting listed means making the shares of your company available to the common public through a stock exchange. It is a source of finance and letting out ownership to the public in the form of equity shares. The process is known as IPO (Initial Public Offering). Listed companies can also raise equity finance but then it is known as FPO (Further Public Offering).
The process of floating an IPO is quite long and might take a few months. A lot of paperwork and legalities are involved. The basic steps can be explained as follows: Steps involved:
First and foremost understand whether your company satisfies the required norms of getting quoted on a particular stock exchange.
Appoint an attorney to do the necessary paperwork. A lot of paperwork is required for getting listed. Also the attorney will understand the legal formalities of the FSA (Financial Services Authority)
Once you know your company satisfies all the norms register with the particular bourse, apply for registration. The registration statement should contain all the necessary information. No misleading information should be provided.
A prospectus has to be prepared giving details of the financial standing of the company, the market position, the growth potential and the risks that might occur.
Ordain an underwriter who analyses your company and agrees to buy securities to sell out to the public. The underwriters use the prospectus to try to influence the potential buyers.
After the underwriting process the most important stage in the process of IPO is marketing. Marketing the IPO is important because till then your company is not known to many. It is the only way to convince public to buy the shares of your company.
Once the FSA approves the IPO you can decide a price band with the help of the underwriter and then open it for the public to buy.
After the shares are sold till a particular date the stock exchange analyses the IPO and sets a starting price on the day of listing. After all this your company gets listed on the stock exchange.
London Stock Exchange:
LSE is the major bourse in the European market. By volumes it is the fourth largest stock exchange it the world. The requirements to be listed on the LSE are: Market Capitalisation: minimum £700,000
Public floatation: minimum 25%
Audited financial statements of three years
Working capital sufficient for at least a year from the date of getting listed
There are many other local stock exchanges as well like PLUS, Markit BOAT and Project Turquoise. One can also opt for international stock exchanges like the NYSE, NASDAQ, Tokyo, Shanghai or the Bombay stock exchange.
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