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Merits and Demerits of Listing of Securities
Listing of shares if beneficial both to the company and the investors. To the company, listing gives a higher status and the listed securities enjoy a privileged position.


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Carrying the hallmark of the prestige of the exchange listing the shares, listed shares preferred of investments. An open and continuous market with informed buyers and sellers is ensured. The transaction of business under well-defined rules and regulations imparts a high degree of liquidity and price continuity to listed securities. Hence, they have high collateral value for bank borrowings. Tax reliefs are also available. Financing of future expansion activities also is made easy.

To the investor also, it ensures reasonable safety, liquidity and price continuity. The listed securities do not fluctuate widely. Evaluation of holdings for the purpose of assessment for Income-tax, Wealth-tax and Estate Duty is rendered easy. There are also assured of a fair and equatable allotment, reasonable facilities for and public ownership of shareholdings, contributing to the growth of corporate enterprises. The dealers are also benefited. They receive the benefit of a regular and systematic quotation service and are assured of easy conversion facilities and the prevailing price.

However, the listing of shares by a company induces its management to take an undue interest in their securities prices. They may misuse the 'inside information' and speculate in company's shares, ignoring the shareholders' interest. Substantial interests can be purchased by interested parties with a view to acquiring control over the company's management. Sometimes, the disclosure of information connecting the working of the company etc., may adversely affect its competitive standing. Sometimes, the listed securities are subject to more violent fluctuations in prices due to the questionable activities of uninformed and inexperienced or weak speculators. These fluctuations will affect the image of the company and the interests of the investors.

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