Benefits to Listed Companies
The benefits that are offered to companies listed with OTCEI are as follows:
1. Negotiability: The Company can negotiate the issue price with the sponsors who have to market the issue. It provides an opportunity for fair pricing of an issue through negotiation with the sponsors.
2. Fixation of premium: In consultation with the sponsors, the company can fix an optimum level of premium on issue with minimum risk of non-subscription of the issue.
3. Savings in costs: Lots of costs associated with public issue of capital are saved through this mode. It provides an opportunity to companies to raise funds through capital market instruments at an extremely low cost as compared to a public issue. The method of sponsors placing the scrip‘swithmembers who in turn will offload the scrip‘stopublicwill obviate the need for a
public issue and its associated costs.
4. No take-over threat: OTCEI lists scrip‘sevenwith 40 percent of the capital offered for public trading. The limit has now been brought down to 20 percent in the case of closely held companies and new companies. As a result, the present management of the companies are saved of threats of takeover if they restrict public offer.
5. Large access: Accessing a large pool of captive investor base through the OTCEI‗s computerized network is made possible for companies. Though nationwide network for servicing of investors, companies listed on OTC Exchange can have a larger investor base.
6. Other benefits:
10. Helpful to small companies
11. Shares of all unlisted companies can now be traded on OTCEI
12. Platform for issuers and first-level investors like financial institutions, state level financial corporations, Foreign Institutional Investors, etc.
13. System for defining benchmark for securities
14. Increasing business for the market constituents