A type of listing whereby the share of a company is listed on one foreign/ offshore exchange or more, in addition to its domestic exchange. To be secondary-listed (cross-listed company), a company must meet the requirements of all the listing exchanges, domestic and foreign.
For a proper secondary-listing, an issuer starts with developing a share structure in line with the regulations of its jurisdiction, the rules and regulations of each stock exchange where its shares will be listed and traded (including respective securities laws).
A company first lists its stock on its domestic or national exchange, and then on foreign exchanges. The objective is to make shares traded on each exchange “fungible” with the shares traded on the other exchanges. Fungibility entails that the shares traded on each exchange must have the same features (rights, currency denomination, and tradability). To that end, share classes can be developed that correspond to certain categories of shares in the domestic market. Rights include financial and voting rights, which must be equal across different exchanges. Tradability implies the ability to purchase shares on one exchange and sell them on another exchange.
These unified features are meant to help holders of a secondary-listed shares to mitigate currency risk, enhance liquidity and price discovery of the shares, and enlarge the universe of investors and market players interested in its shares.
It is also known as a cross listing.
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