The securities market in Azerbaijan is regulated under the Law of the Republic of Azerbaijan on Securities Market. According to the law, public offering of shares and bonds can only be carried out through a stock exchange. Shares and bonds have to be listed in order to be traded publicly.
Listing is an English word with the meaning “to list”. Admission of securities to the list of traded financial instruments in regulated market is relevant meaning of the word. Regulated market here means stock exchanges. Very often both words used as synonyms as well.
The difference of regulated markets, i.e stock exchanges from “black market” is that investors in regulated markets are protected, and necessary frameworks and mechanisms exist in regulated markets to ensure transparency and fair pricing.
One of the main aims of market regulation is to protect the rights of investors – individuals, companies and establishments.
Baku Stock Exchange (BSE) is the only stock exchange and the only organizer of trading of securities in regulated markets in Azerbaijan. At present, shares and bonds of most companies (both open and closed joint stock companies) operating in the country are traded on BSE, meaning that the traded securities are listed in accordance with “Lısting rules” of the BSE.
1. Raising long-term capital – Listing enables to raise long-term capital that is required to finance new investments for business expansion.
2. Access to new investors –Listing of company securities attracts new investors such as banks, insurance companies, international investors and public who are willing to buy those securities.
3. Building positive reputation –Listed companies attract public interest and therefore media regularly reports about listed companies, which in turn helps to build better reputation compared to others. Easy public access to company profile helps to build trust of customers, investors and suppliers in the company.
4. Liquidity and secondary market –Listed company’s shares can be sold to other investors in the secondary market. Secondary market enables easier trading of securities – liquidity which helps to attract more investors.
5. Employee motivation –Shares of a listed company can be awarded to employees that helps them gain extra profit from dividends and share price increases. This means that employees become more motivated to grow the company.
6. Company’s market value –Open access to a listed company profile is regularly assessed by professional participants of securities market. Continious assessment of shares helps to determine company’s market value.
7. Withdrawal of founders –Listed company’s initial shareholders may sell their shares to other investors, return their investment and withdraw from the company.