Stock Exchange listing: Summary highlights
CAPITAL may be raised through an initial issuance of a company’s shares to the public. This is known as an initial public offering (IPO). Simply put, an IPO is when a private company sells its securities to the general public for the first time.
These shares are subsequently listed and officially traded (exchange hands) on a registered stock exchange like the ZSE or FINSEC.
Once a company has been listed, additional revenue can be generated through additional offerings.
This would involve the creation and sale of new shares to existing and new investors in the marketplace.
Additional capital raising through offering shareholders additional securities in proportion to their existing shareholding is known as a rights issue.
Listing on a stock exchange has certain inherent advantages which include increased access to cheaper long-term capital, improved company public profile and visibility.
Once listed, companies must comply with all continuing obligations on an ongoing basis in order to avoid suspension or ultimate delisting.
Compliance at all times signals quality management / governance standards.
Continuing obligations are outlined in an Exchange’s listings requirements.
Listing requirements are set by the respective Exchanges with approval from SECZ.
Requirements for the Zimbabwe Stock Exchange (ZSE) and Financial Securities Exchange (FINSEC) can be accessed from the respective Exchanges’ website links: <https:// www.zse.co.zw>, <http://finsec.co.zw/regulations.php>.
While a company can choose to list on one stock exchange, others may opt for cross listing or dual listing.
A cross listed company is a single legal entity whose shares are listed on multiple Exchanges.
Dual listing involves two legal entities functioning as a single operating business through a legal agreement, but retaining separate legal identities and stock exchange listings.
Key amongst the objectives for dual listing is access to deeper and more liquid equity markets for wider financing options.
Dual listing brings about Geographic diversity which has the potential to reduce the degree of risk on overall investment portfolios.