3.WHAT IS 'LISTING OF THE COMPANY' ?

When we read newspaper we encounter news like, so and so company coming to IPO and it is going to be a listed company ... But we dont know what this actually mean,after reading this post we know what the listing of a company is...

As we are learning from basics,it is necessary to have a look on the types of companies and shares for the better understanding.After that we will be knowing what is 'Listing of the Company' is..
TYPES OF COMPANIES:
Basically there are different types we have but, to have good picture on sharemarkets lets discuss only on two important types.They are
1.PRIVATE COMPANY         and   2.PUBLIC COMPANY

1.PRIVATE COMPANY:A private company should established on dependence of the rules and regulations of the country.As i'm from India i'll list some of the rules which need to be followed in India.They are

• Its shares cannot be sold freely to any one in the open market.There is a complex process to transfer the shares.
• Private company should have 2-50 members and directors min of 2,excluding the shareholders and employee.
• The name of the company must be appended with "Private Limited"at the end of the name.

There are many rules but i have just mentioned only few of them for the basic understanding...

2.PUBLIC COMPANY:Similar to private limited company it is too with the rules.In India they should be on the basis of Company Act 1956.Some of them are

• There shares can be sold freely in the open market.There is no complexity in buying or selling.
• Public limited company should have at least 7 members and Directors of minimum 3.
• The name of the company must be appended with "Limited" after its name.

TYPES OF SHARES:
Basically,they are
EQUITY SHARES,          PREFERENCE SHARES,                       DEFERRED SHARES
I'll only go with starting two types because 3rd one is discarded now a days..

EQUITY SHARES: These shares are more risky when compared to the preference shares.The holders of these shares are real owners of the company.

• Share holders of these type will get profit by Speculations or by Dividend(we will be discussing these terms in next post i.e 'How people earn from shares')
• Every share will have FACE VALUE and BOOK VALUE or Nominal value. (Dont worry about the words we will be knowing in next post).
• These share holders may or may not get dividend after every year.If company want its profit to be with them for the development of the company,in that case dividend will not be given.
• Share holders are with right on the company decisions and voting facility on depending how many shares they have.

Remember Equity shares are also known as ORDINARY SHARES.

In general equity shares are taken for the Speculation purpose.

PREFERENCE SHARES: They have 2 major rights

• Dividend will be given priorly to Equity share holders
• In the case of company wounding up ,share holders of preference are first paid...
• Depending upon the terms and conditions these shares can be converted to Equity shares.

Preference shares cannot be speculated...

Now,let us discuss about what the 'Listing of the Company' mean...

LISTING OF THE COMPANY:

In recent times shares use to be an agreement document papers.Person with shares he need to go to market to sell them.But due to advancement of technology now physical paper system are discarded and only electronic system comes to play.. Now when shareholder want to sell his share he need not to come to share market he just do it by Online system.Now every thing is only by online internet.

so,company which comes to IPO and whose shares are traded on the stock market such companies are called "LISTED COMPANY"

Remember Companies are not Listed just Shares of the company are listed.Company whose shares are listed such companies are called listed company.

we will be discussing about how people earn by sharemarkets in upcoming posts...

(I will be glad if you send your suggestions or feedback to the mail id basiclionmarket@yahoo.com )