How does a dual stock listing work?
Information piece by the Namibian Stock Exchange (NSX) on Dual Listed Companies (DLC).
Dual listing occurs when a company’s stock is listed on two or more exchanges. Typically, a company will be listed on a stock exchange in its home country as well as a prominent exchange such as the Johannesburg Securities Exchange (JSE), New York Stock Exchange (NYSE), or Nasdaq.
DLC is a commonly used abbreviation for dual-listed companies. A dual-listed company is made up of more than one legally registered corporation that operates as a single business.
A company with or seeking a dual listing on the NSX may decide where it intends to have its primary or secondary listing(s). Trustco Group Holdings is an example of a dual-listed company. Trustco Holdings is a Namibian company that has its stocks listed on both the JSE and the NSX. It trades under the ticker “TTO” on the JSE as a primary listed company and under the ticker “TUC” on the NSX as a secondary listed company. Because of the listings on the two different exchanges, Trustco is said to be a dual-listed company.
Any company that is listed on more than one exchange must fully comply with the legal and listing requirements of all the countries and their respective exchanges that it is listed in. Complying with the regulations of only one of the countries or exchanges is not sufficient.
Generally, the exchange on which the primary listing resides takes precedence in the enforcement of any listing’s requirements ahead of the exchange on which the secondary listing resides. However, where such primary listing is not on the NSX, the NSX reserves the right to instruct the issuer to comply with certain specific sections of, or in full with, the Listings Requirements, where it determines such requirements to be in the interest of shareholders.
Each company comprising the DLC structure will be required to comply with all continuing obligations provided that in the event of a conflict in the requirements of the relevant exchanges the most stringent requirements must be complied with. This includes the Code of Corporate Practices and Conduct, which will apply to directors of any board or committee and relevant employees of the DLC structure, as well as the directors of each company comprising the DLC structure.
Where an announcement is required, it must be released, in accordance with the relevant stock exchange requirements, simultaneously on the JSE and the NSX or on any other exchange where an alternative listing of the company’s stock is done. For instance, if a listed company is suspended on the JSE, it is automatically also suspended on the NSX.
Reasons Behind Dual Listing.
A company may choose to have its stock listed on more than one exchange for a variety of reasons:
1. Access to a larger capital base;
One of the reasons a company may resort to dual listing is the opportunity to raise more capital. It provides the company with access to a larger investor base.
2. Greater liquidity;
Additionally, dual listing increases the liquidity of the traded stock because it allows a larger number of participants to engage in the buying and selling of the stock.
3. More trading time;
Furthermore, if a company is listed on an exchange in a different time zone, it provides participants opportunities to trade more often in a 24-hour period.
• When a company’s shares are listed on more than one exchange, it is said to be dual listed.
• Dual listing allows a company to increase its access to capital and makes its shares more liquid.
Examples of Companies with Dual Listings:
There are many companies worldwide that are listed on more than one exchange. The table below lists some of these companies with dual listings.
• Investec – Listed on the JSE in South Africa “INL”, the London Stock Exchange in the UK and the NSX “IVD”
• B2Gold – listed on the Toronto Stock Exchange in Canada, symbol “BTO”, on the OTCQX under the symbol “BGLPF” and the NSX “B2G”
• Shoprite – Listed on the JSE “SHP” and the NSX “SRH”