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Also known as a quoted company, a listed company is any business that issues shares of stock that are quoted and traded on a stock exchange. In many countries, governments require that companies register before being allowed to issue and trade shares on exchanges. This makes it possible for anyone to access a listing, such as the United Kingdom’s Office List, of the currently listed companies as a means of identifying viable investments.
In some countries, a listed company may also be allowed to trade debt securities rather than shares on some type of exchange or market. Some examples of a debt security would be municipal bond issues, various types of collateralized securities, or even government bonds. As with the issue of shares, the company would have to meet specific criteria before being allowed to trade debt securities in the marketplace.
A business may be a single listed company, which means there are no subsidiaries or sister corporations that are part of the same quote or listing. In some cases, two businesses may choose to make use of what is known as an equalization agreement in order to be listed as a single quoted company. The two companies remain separate entities, but are recognized as a dual-listed company or DLC for purposes of trading shares on a stock exchange.
There is sometimes confusion between the dual-listed company and what is known as a cross-listed company. While the dual-listing relates to the establishment of an agreement between two companies regarding the trading of shares on a specific stock exchange, a cross-listing has to do with one of those companies involved in the dual-listing trading shares on more than one exchange. This distinction is important, especially to investors, since it can have some impact on whether or not to trade shares of the company or companies involved.
Once established as a listed company, the business can trade shares as long as the issue of those shares is in compliance with regulations put in place by the governmental agency or commission that oversees the issue of stock within the nation where the exchange is located. Should the company or companies that constitute the listing fail to comply with those regulations, there is a chance that the trading of the stock will be temporarily placed on hold, pending an investigation and resolution to the matter. It is also possible for a listed company to lose its listing, if the infractions are serious enough to merit this action, or if the circumstances of the business change to the point that it can no longer support the issue of stock.
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