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        What is Dual Listing
What is dual listing?
Post acquisition or merger between two companies, usually one company survives while the other loses its identity. In sharp contrast to this, under the concept of dual listing company (DLC), both the companies retain their individuality. Hence in a DLC there are two listed companies usually located in two different countries and both companies have their own set of shareholders.

However, both sets of shareholders enjoy the ownership of the same business and assets. Generally the same board of directors and management team manage both the companies. To ensure that both set of shareholders share similar amount of risks and rewards, an equalisation agreement is signed. The concept of DLC is yet to come in India but this is a old concept in some developed countries. Unilever, BHP Billiton and Carnival Corporation & Plc are a few examples of dual listed companies.
What are the advantages?
Since the companies are located in two different countries, usually there are tax incentives for adopting the DLC model. A simple merger may result in huge tax liability to the acquirer in terms of capital gains. Similarly, dividend payment in different countries may have different tax treatment. A DLC model minimises the cross border flow of dividend to a great extent. Sometimes issues related to national pride go against a merger, however, it may not find a place in DLC. As in a merger the target company loses its identity and in case, the target company is part of an index of a stock exchange, the index funds may have to sell the shares of the target company. This may result in decline in share prices; however, in a DLC such issues may not take place.
How is it different from cross listing?
Cross listing is general listing of a company in more than one SE. In this case, shares listed in all SEs belong to the same company. The major difference between the two is the fact that in dual listing, shares of both entities are not convertible into each other. Thus DLCs are two different entities listed in two different SEs and not the same stock listed in several SEs. Also, there are organisations, which are listed in different SEs and underlying asset for shares listed in different exchanges are different. Such stocks are known as tracking stocks.

Why is dual listing in news?
Dual listing came into news after the South African government sought dual listing for Bharti Airtel and MTN. One of the major hurdles for India for dual listing is that acquisition of more than 15% stake in any company triggers open offer. This means the acquiring company will have to come out with open offer for investors of the target company.

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