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What are Listed Shares?
Listed Securities are traded on BSE, NSE, etc. Private companies that go public must list on an exchange. An exchange requires entry and annual listing fees. Minimum stockholder equity, price, and count vary by exchange. Exchanges require high-quality securities to maintain their reputation with investors.
Listed Shares means the number of issued and outstanding shares of the company listed on the TSX, excluding dilutive securities not yet converted.
How Does Listed Shares Work?
In order to finance their operations, companies issue shares to the public. They issue shares in an IPO on the primary market and then trade them on the secondary market. Investors typically purchase shares from other investors. And if you want to unload some shares, you’ll have to find a buyer for them.
Buying and selling shares are handled by stock exchanges, with brokers representing investors.
Features of Listed Shares
Stock exchange is an organized market. Every stock exchange has a committee with management and control rights. All stock exchange transactions are regulated by the management committee
Transactions in various companies' securities
Stock exchange trades only listed securities. Stocks are listed after meeting certain conditions
Transacting only through Authorized Members
Only authorized members can sell and buy stocks. A stock exchange is a market where only authorized members can participate. Investors must take their help to sell and buy
Must obey rules and bylaws
Stock Exchange transactions must follow the exchange's rules and bylaws.
Who issues Listed Shares?
A Limited Company can issue shares to the public (with SEBI approval) or to friends, relatives, business partners, etc. in case of a Private Limited Company. Private companies can’t invite the public to buy stock. The Companies Act, 2013 prohibits issuing more than 200 shares of a private limited company.
Benefits of Listed Shares
Comparison of Listed Shares with other products
|PARTICULARS||LISTED SHARES||UNLISTED SHARES|
|Meaning||Listed Shares are stocks listed on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE).||Unlisted shares are those that are not listed on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE).|
|Trading||Shares that are listed are traded on stock exchanges.||Shares are traded OTC. The shares can be bought and sold by brokers or directly.|
|Classification as Long Term and Short Term||Listed shares are long-term if held for over a year. Less than 12 months is short-term.||Unlisted shares are long-term if held for 24 months. Less than 24 months is short term.|
|Selling Price for Computation of Capital Gain||Stock exchange trading makes purchase and sale prices readily available.||First, the fair market value of the shares sold must be determined. The higher of fair market value and actual selling price is used to calculate capital gain. Merchant Banker or Chartered Accountant calculates FMV|
|Benefit of Indexation||No indexation is provided when computing capital gains.||Indexation helps compute Long-Term Capital Gains|
|Rate of Tax||Tax-free long-term gains up to Rs. 1 lakh. Gains over Rs. 1 lakh are taxed at 10%. Short-term gains are taxed 15%.||Long-term capital gains are taxed at 20% after indexation and 10% without indexation if held by a nonresident. Short term gains are taxed in slabs.|
|Set off and Carried Forward of Losses||Long-term capital losses can only be offset by long-term gains, but short-term losses can be offset by both. Losses carried forward for 8 years||Long-term capital losses can only be offset by long-term capital gains, but short-term losses can be offset by both types of gains. Losses can be carried over for 8 years.|
Why should you invest in Listed Shares?
As per Regulation 46 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, the Company’s (a recognized stock exchange) securities must be held in dematerialized.
Dematerialization is the process by which a Shareholder can get physical certificates converted into electronic mode. Shareholders who want to dematerialize must have a depository participant account (DP).
As per Regulation 46 of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, a stock exchange’s securities must be dematerialized. The amendment to SEBI (Listing Obligation and Disclosure Requirements) Regulation 40 mandates that securities can only be transferred in dematerialized form as of December 5, 2018, which SEBI extended to April 1, 2019.
In the case of a share transfer between a resident buyer and a non-resident seller or vice versa, the buyer may pay up to 25% of the total consideration within 18 months of the transfer agreement. Deferred amount can be indemnity or Escrow. Always follow pricing guidelines.
Foreign Portfolio Investors (FPIs) registered under SEBI (FPI) Regulations and NRIs/OCIs can invest on Indian stock exchanges, subject to the individual and aggregate limits in schedules 2 and 3 of FEMA 20. (R).
How to invest in Listed Shares?
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