In the context of an increasingly developing global economy, listing on the stock exchange has become a critical strategic step for many businesses. Listing not only helps enterprises enhance their ability to raise capital but also elevates their reputation and brand image in the eyes of investors and the public.
- Definition of Stock Listing
Stock listing refers to the process undertaken by a stock exchange to evaluate, verify, and approve the securities of an issuing organization that meet the eligibility criteria for trading on the stock exchange.
Securities listed on the stock exchange bring certain benefits to all related parties.
- Benefits of Stock Listing for issuers
When securities are listed on the stock exchange, the issuing organization gains the following advantages:
- Enhancing the reputation of the issuer
The reputation of the issuing organization is significantly elevated. According to international practices and regulations, the conditions for securities to be listed on the stock exchange are highly stringent. Not every issuing organization can have its securities approved for listing. The listing of securities on the stock exchange clearly enhances the organization’s credibility within the business community and increases investor confidence.
Through listed securities, the issuing organization finds it easier to conduct business and raise capital from investors. Moreover, the cost of raising capital is generally lower compared to organizations whose securities are not listed.
- Improving liquidity for securities
The stock exchange is the most efficient, secure, and convenient platform for trading securities. This ensures that securities listed on the exchange are more easily and conveniently transferable compared to unlisted securities.
- Determining the market value of securities
Listed securities are regularly traded on the market. Based on the supply and demand dynamics at the stock exchange, stakeholders can determine the market price of these securities. This is crucial for evaluating the true value of the issuing organization and for issuing additional securities.
- Tax incentives
In emerging markets, including Vietnam, organizations with listed securities often enjoy tax incentives for a certain period. This is a policy adopted by many countries to encourage organizations to issue and list securities, thereby promoting the development of their stock markets.
- Benefits of stock listing for other stakeholders
- For the stock exchange
The more securities listed on the stock exchange, the greater the reputation of the exchange. Additionally, an increased number of listed and actively traded securities boosts trading volumes and, consequently, the revenue generated from transaction fees collected by the exchange.
- For brokerage firms (Members of the exchange)
The increase in listed and traded securities provides brokerage firms with more opportunities to facilitate buying and selling for investors, thereby driving up their revenue from brokerage activities.
- For the State
The listing of securities aligns with the strategic direction of stock market development that every nation pursues. It also fosters greater transparency and disclosure within the stock market, contributing to its healthy development. Vietnam is no exception to this trend.
- For Investors
The listing of securities by issuing organizations provides investors with additional high-potential investment options. In practice, in Vietnam, securities of organizations preparing for listing or newly listed securities often attract strong interest and demand from investors. This is driven by the belief in price appreciation and the growth prospects of the issuing organization.
In conclusion, listing on the stock exchange offers numerous tangible benefits for businesses, including efficient capital raising, enhanced credibility, and greater transparency in business operations. Furthermore, being present on the stock exchange creates favorable conditions for businesses to expand their market and capture investor attention. However, to fully capitalize on these advantages, businesses must prepare meticulously and maintain a sustainable management strategy, thereby contributing to long-term growth and stability.
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1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
Dinh Phuong Thao