Reasons Companies Get Listed

Companies have different reasons for seeking a listing on the Bursa Malaysia but the primary reason is to raise capital.

Getting listed, or going public as it is sometimes referred to, is regarded as an efficient and cost-effective way to raise funds (which are interest-free) for the expansion of business operations as an alternative to borrowing from banks.

Some of the other reasons for getting listed are as follows:

Higher profile
A listed company has greater visibility and a higher profile than one that is not listed. Publicity is generated by stockbroking companies which will disseminate information on public listed companies as will daily newspapers which carry stock market reports as regular features.

This will ultimately help to stimulate growth in the company and attract new business.

Confidence
Investors tend to have greater confidence in public listed companies. Once listed, the reputation and credibility of a company is enhanced. This is justifiable as the company would have to first fulfill the stringent listing requirements of Bursa Malaysia before being admitted to either the Main Board or Second Board of Bursa Malaysia.

Additional funds
Another major advantage for companies listed on Bursa Malaysia are to provide liquidity for investors and an efficient valuation system. By being listed, investors will be able to sell their shares anytime on the market and there will be a market value for the shares.

Thus, for the companies, there is a well-accepted valuation basis for its shares, i.e. the market value.

In addition, a listed company that is well managed and displays strong responsibility towards its shareholders has the potential to raise more funds from the existing shareholders via rights issues and loan stocks. The proceeds can be used for expansion, new projects or reducing debt.

Expansion
Listed companies will be in a better position to expand their operations overseas. This is because listed companies have greater recognition as there is more publicity on their activities.