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Question

Mr. Khan, Director of Terrian Automobiles, a newly established company is total confused whether to have paid-up capital of Rs 2 crores or Rs 25 crores. He also desires to get company's shares traded at any national level stock exchange. If you are the financial advisor, please suggest two stock exchanges Mr. Khan can consider for raising capital? What are the objectives of one of those stock exchanges?


Solution

The two stock exchanges Mr. Khan can consider for raising capital are — National Stock Exchange (NSE), if Mr. Khan wishes a paid-up capital of Rs 25 crore or Over-the-Counter Exchange of India (OTCEI), if he wishes a paid-up capital of Rs 2 crores. NSE provides trading facilities for large-scale businesses within and across the country while, OTCEI promotes trading platform for small-scale businesses. Objectives of NSE are as follows :

(i) To establish a nationwide trading facility for equities, debt instruments and hybrids (preference shares).

(ii) To ensure all investors across the country have equal access through an appropriate communication network.

(iii) To provide a fair, efficient and transparent securities market to investors through an electronic trading system.

(iv) To enable shorter settlement cycles and book entry settlement systems.

(v) To meet the current international standards of securities market.


Business Studies

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