A dual listed company is a company that is listed on a second exchange in addition to its primary exchange and can be traded on both. This is often done to increase liquidity and to access capital in other markets.

A dual listing can work both ways. This means that an Australian Stock Exchange (ASX) listed company can list in another foreign exchange such as the New York Stock Exchange (NYSE) and companies on foreign exchanges can list on the ASX. 

• Examples of international companies listed on the ASX are Auckland International Airport (ASX: AIA) and Kathmandu Holdings (ASX: KMD) that are both listed on the NZX (New Zealand Stock Exchange)

• Australian companies that are listed on international exchanges include RioTinto (RIO:ASX) listed on the LSE (London Stock Exchange) and Afterpay (ASX:APY) which is listed on the ASX and the NYSE.

Why do companies Dual List?

The main benefit of a dual listing is access to a greater audience which provides opportunity for more access to capital and greater liquidity. Listing on two exchanges provides two audiences of investors to buy and sell shares in a company and some exchanges have a much higher number of active investors on them. This also means the shareholder base will be more diversified and provides more opportunity to raise capital for the company. Different companies may also benefit from better valuations in different markets like tech stocks on the NYSE compared to the ASX, for example.

These positives come with the negative side of greater administration and compliance as well as the cost of maintaining both listings. The governance and listing rules differ across exchanges and usually require resources to maintain. There are also costs involved in being registered on an exchange which is another downside to being dual listed. 

How do companies Dual List?

Listing on a secondary exchange requires the company to IPO on the second exchange. To do this two companies transfer their assets to a joint subsidiary and dividends are passed back to the main companies and then onto the shareholders.

Alternatively, instead of transferring assets they can enter a contractual agreement to share cash flows and assets. For example, Rio Tinto plc is listed on the LSE and Rio Tinto Limited is listed on the ASX. They use a contractual agreement to dual list and trade the same company on different exchanges. 

What does this mean for the price in both?

Theoretically the price should be the same on both exchanges after accounting for exchange rate risk. It is possible to arbitrage trade dual listings, however, this is typically done by large funds and traders which ensures that price discrepancies don't last long.

Dual Listing vs Cross Listing

A dual listing is done when one company uses two companies trading different shares on different markets to be listed on both markets similar to the Rio Tinto example above, whereas, cross listing is more common in the US where American Depository Receipts (ADRs) are used to trade the exact same stock on two different markets.

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