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By Mark Peterson, NZX Head of Markets

A privately owned company becomes public by listing its shares on a stock exchange. Being publicly listed means a company can provide investors with an opportunity to own a small part of a business by buying shares in it. 

Why would a company want to be listed on the stock exchange?

A company might choose to list for any of the following reasons. 

•  To obtain capital in order to grow funds, both at the time of listing and on an ongoing basis.

•  To access a tradable market for shares, with a transparent market price and increased liquidity for shareholders.

•  To reward loyal employees through employee share schemes, based on a transparent valuation of the business.

•  To increase awareness and enhance the credibility of the business among customers, suppliers and the wider public.

What market should a company be listed on? 

NZX operates two distinct, targeted share markets. 

NZX Main Board (NZSX) 

This is a public equity market for larger, more established businesses. For example Spark, Fletcher Building and Trade Me are Main Board listings. 


This is a new NZX market built for smaller, high-growth businesses. NXT is positioned as a ‘stepping stone’ market for companies that have not yet grown large enough for the Main Board. 

NZX also operates the Alternative Exchange (NZAX), which was initially developed for smaller businesses. However, since the launch of NXT this market no longer accepts new listings.

What are the first steps for a company wanting to be listed?

Stock exchange listings can be made at different times and for different reasons. They usually start out with a company making an initial public offering (IPO) in conjunction with the company’s first public offering of securities (shares). This method is traditionally used to raise more capital. 

Alternatively, a company might make a compliance listing, where it only lists its existing shares, without raising any further capital. 

What’s the full process for listing? 

The listing process differs for businesses listing on the NZX Main Board or NXT. It also varies according to whether a company chooses to undertake an IPO or a compliance listing.

Outlined in Figure 1 is the IPO listing process. 

Through the IPO process, a company will have to explain its background, positioning and strategy in a way that’s easily understood by potential investors. Investors will evaluate the quality of the board and management teams, and their track record. They’ll also assess the feasibility of the growth plans, along with the various risks the business faces.

Becoming IPO-ready is a complex process for any business, and it can result in fundamental changes to the way a company operates. Careful planning and preparation are essential to ensure new processes are in place and working, before operating in a listed environment.

Listing offers meaningful benefits, but the process itself can take a long time. It’s essential the company has sufficient internal resources to cope with what’s required, and that its governance and management teams are appropriate for a listed company.

Remember listing has an associated initial and ongoing cost, some of which is calculated on the size of a company’s market capitalisation.

What are the key phases of an IPO?

Before preparing for an IPO, a business must have the appropriate governance structure and financial objectives in place. From there the company can then set about preparing for and executing the IPO. 

However, the work does not stop there. Once a business is listed there is an ongoing need to engage with shareholders and deliver on its forecasted potential.

What requirements must a company meet to be listed?

Any company considering listing on a public share market must meet a number of requirements. These requirements are outlined in the table (Figure 2).

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BOOK-BUILD: the process of generating and recording investor demands for shares during an IPO.

DISCLOSURE: the way key business, financial and transaction information about an issuer is provided to the market.

FREE FLOAT: a way of calculating the market capitalisation of a company. It multiplies the share price by the number of readily available shares in the market. It excludes shares held by strategic holders.  

GOVERNANCE: the direction and control of an issuer by its board of directors. Governance arrangements are underpinned by various rules, processes and policies that seek to balance the interests of the many stakeholders in a company, such as its shareholders, management, customers, suppliers, financiers, government and the community. 

LIQUIDITY: the speed at which an investor can convert assets to cash.

MARKET MAKER: an individual or institutional dealer who is willing to buy and sell shares in a particular security most of the time.

SPREAD: the difference between the price investors are willing to buy a security at and the price they are willing to sell a security at.