BA-201 · Lesson 1 of 11

Why list a company

We look at the benefits, costs and trade-offs of listing, as well as the choice between shares and bonds as a financing instrument.

12 min read Intermediate The Issuer's Guide: The Listing Process
Track contents How to List a Company on the Stock Exchange
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BA-201 · The Issuer's Guide: The Listing ProcessWhy list a companyListing on BIMx: the Regulated Market or the MTFPreparing the company for listingThe prospectus and documentationThe public offering and admission to tradingObligations after listing
BA-204 · Admission to BIMx in PracticeShares on the Regulated Market: requirements, file, stagesShares on the MTF: the Agreement in Principle and actual admissionIssuers listed on the BVM: how they reach BIMx
BA-205 · Municipal Bonds and Government Securities at BIMxMunicipal bonds at BIMxGovernment securities at BIMx

What listing actually means

For many entrepreneurs, listing on the stock exchange looks like a ceremonial moment. In reality, it is a strategic financing and governance decision: the company accepts a high level of transparency in exchange for access to a broad pool of investors and an organized price-formation mechanism.

It is important to distinguish between two situations. In a primary offering, the company issues new securities and the money raised goes into the company. In a secondary offering, existing shareholders sell part of their holdings and the money goes to them, not to the company. Many offerings combine both components, and investors will look closely at the split, because it shows who benefits from the funds raised.

The benefits of listing

  • Access to capital: the company can raise financing from a large number of investors, not just from banks or a few private investors, and can return to the market for later issues.
  • Liquidity for shareholders: founders, employees and existing investors can sell or buy securities on an organized market.
  • Market valuation: the trading price provides a public benchmark of the company's value, useful in negotiations, mergers or acquisitions.
  • Visibility and credibility: listed-company status and greater transparency can strengthen relationships with partners, customers and creditors.
  • Management discipline: periodic reporting and stricter governance often improve the quality of internal decisions.
  • Incentive tools: listed shares can be used in compensation plans for managers and employees.

Costs and trade-offs

The benefits of listing come bundled with direct costs, recurring costs and, perhaps most importantly, changes in the way the company is run. A mature decision weighs these against the alternatives: a bank loan, a strategic investor or an investment fund.

CategoryExamplesNature of the cost
PreparationAudit, moving to more demanding reporting standards, legal restructuringOne-off, sometimes significant
TransactionIntermediary, legal adviser, prospectus, authorization and admission feesOne-off, at the time of the offering
MaintenanceAnnual fees, periodic reporting, investor relations, annual auditRecurring
Management timeManagement involvement in preparation, presentations, communication with shareholdersOne-off and recurring
Trade-offsTransparency toward competitors, dilution of control, pressure for short-term resultsPermanent

Shares or bonds?

The capital market offers two main instruments. Shares bring in equity: they do not have to be repaid and carry no interest, but the new shareholders receive voting rights and a share of future profits. Bonds bring in borrowed capital: the founders do not give up control, but the company must pay coupons and repay the principal at maturity.

CriterionSharesBonds
Nature of financingEquityDebt
RepaymentNoYes, at maturity
Cost to the companyShareholder dilution, dividends (optional)Fixed or floating coupons (mandatory)
ControlShared with the new shareholdersStays with the existing shareholders
Suitable forLong-term growth, higher riskStable and predictable cash flows
Annual coupon cost
Annual coupon = Total nominal value issued × Coupon rate
Add the issuance costs and, at maturity, full repayment of the principal.

Key takeaways

  • Listing is a financing and governance decision, not just an image event.
  • In a primary offering the money goes into the company; in a secondary offering it goes to the selling shareholders.
  • On top of the one-off transaction costs, the company bears recurring costs for reporting and investor relations.
  • Shares are not repaid but dilute control; bonds preserve control but require fixed payments and repayment.
  • The specific requirements and fees are set out in the BIMx rules and the applicable regulatory framework.

Check your knowledge

Answer all the questions. If you answer all of them correctly, the lesson is marked as completed automatically.

Question 1 of 3In a secondary offering, who receives the money paid by investors?

Explanation: A secondary offering sells securities that already exist, so the proceeds go to the selling shareholders, not the company.

Question 2 of 3Which feature correctly describes bond financing?

Explanation: Bonds are debt: the company pays coupons and repays the principal, but bondholders do not become shareholders.

Question 3 of 3A company issues MDL 15,000,000 of bonds with an 8% annual coupon. How much does it pay in coupons each year?

Explanation: MDL 15,000,000 × 8% = MDL 1,200,000 a year.

Finished the lesson?Mark it as completed to track your progress.

Educational material only. It does not constitute investment, legal or tax advice. Numerical examples are hypothetical.