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Getting Listed

REASONS FOR LISTING OF A COMPANY TO THE STOCK EXCHANGE

Admission to trading can be an important means of obtaining resources for the company, if it opts for a capital increase with disbursement, or it can be an ideal means to divest and provide liquidity to the former shareholders of the company, if it is chooses for a public offer of sale.

The stock market increases the number of channels for attracting resources and allows the company to capitalize, enabling a more balanced financial policy.

Usually, the IPO involves the transfer of a minority percentage of the company's shares, in such a way that it does not question its control.

In addition to the financial advantages, the listing on the Stock Exchange provides the company with other benefits that improve its profile and strategic development. As an example, the following benefits are worth mentioning:

  • Notoriety of the company
  • Availability of a permanent valuation of the company
  • Discipline in management
  • Independence and financial autonomy
  • Decreased risk profile
  • Liquidity of the shares

CONDITIONS FOR THE ADMISSION OF SHARES TO TRADING

The incorporation to the Stock Market of a company requires a series of minimum conditions to be fulfilled, which can be summarized as follows, for its admission to the first market:

  • Minimum capital: the company must have a minimum capital of 1.2 million euros, excluding individual shares equal to or greater than 25%.
  • Company profits in recent years: the benefits obtained in the last two years, or in three non-consecutive years in a period of five years, have been sufficient to be able to distribute a dividend of at least 6% of the paid-up capital and once the provision for taxes on profits has been made and endowed with the corresponding legal or mandatory reserves.
  • The number of shareholders with individual participation less than 25% of the capital will be at least 100.

In the case of requesting admission to trading in the second market for SMEs, the aforementioned conditions experience a notable reduction. 

PROCEDURES TO FOLLOW FOR THE ADMISSION OF SHARES TO TRADING

  • Corporate agreements (Board of Directors, General Shareholders' Meeting).
  • Prior verification by the CNMV or the Department of Economy, Finances and Planning of the Generalitat de Catalunya of the documents accrediting the agreements and the admission information brochure when required.

REQUIREMENTS AFTER THE STOCK EXCHANGE: INFORMATION DUTIES

The companies that are admitted to listing on the stock market will have the obligation to submit annually the report, financial statements and audit of each year closed to the CNMV, to the Department of Economy, Finances and Planning of the Generalitat de Catalunya, when appropriate, and to the Stock Exchange.

Likewise, on a provisional basis, they will have to submit summarized quarterly and semi-annual financial statements in accordance with the models established by the CNMV. Finally, they must communicate the relevant facts that affect their activity or the valuation of their shares. 

THE COMPANY AFTER THE STOCK EXCHANGE LISTING

As indicated above, the IPO provides important advantages for the company and its shareholders since new capital increases may be carried out, providing new financial resources. Likewise, the qualitative benefits mentioned above will continue to be obtained. 

ECONOMIC ASPECTS

The cost derived from placing a company on the stock market depends on the process followed in each case. With regard to the Spanish stock exchanges, the basic cost for admission is one per thousand over the nominal amount admitted. Likewise, a right of permanence is subsequently applied, which is currently 0.045 per thousand of the company's market capitalization.

It is important to bear in mind that, based on the agreement between the four Spanish exchanges, admission to more than one exchange does not entail any additional cost, since the admission and stay fees are paid regardless of the number of exchanges to which they apply for admission. On the other hand, the subsequent information requirements for exchanges are homogeneous. Multiple admission increases the number of traders that follow the value.

 

 

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