Is it necessary for a public company to get its share listed on a stock exchange? What happens if a public company going for a public issue fails to apply to a stock exchange for permission to deal in its securities or fails to get such permission ?

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Solution

A public company can raise the required funds from the public by means of issue of shares and debentures. For doing the same it has to issue a prospectus which is an invitation to the public to subscribe to the capital of the company and undergo various other formalities. It is necessary for the company to make an application to at least one stock exchange for permission to deal in its shares or debentures by getting its shares listed on the stock exchange.

If a public company going for a public issue fails to apply to a stock exchange for permission before the expiry of ten weeks from the date of closure of subscription list, the allotment of shares done by the company shall become void and all money received from the applicants will have to be returned to them within eight days.

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