Documente Academic
Documente Profesional
Documente Cultură
Introduction
Section 86 of the companies act deals with the kinds of shares that a company can issue. The
share capital of a company limited by shares formed after the commencement of the act issued
after such commencement shall be of two kinds namely:
If the firm is issuing the shares for the first time, it is referred to as initial to as initial
public offer. Initial public offer will be followed by listing of the equity shares in the stock
exchange.
(a)Managers to the issue /Lead Manager : Lead managers are appointed by the company to
manage the initial public offering campaign.
(b)Registrar to the issue : After the appointment of the lead managers to the issue, in the
consultation with them, the registrar to the issue is appointed. The registrars normally receive the
share application from various collection centers. They recommend the basis of the allotment in
consultation with the Regional Stock Exchange for approval.
(d)bankers to the issue : bankers to the issue have the responsibility of collecting the application
money along with the application form. The bankers to the generally charge commission besides
the brokerage, if any. Depending upon the size of the public issue. Underwriters are divided into
two categories :
(f)The financial institution : financial institution generally underwrite the issue and lend term
loans to the companies. Hence, normally they go through the draft of prospectus, study the
proposed program for public issue and approve them. IDBI, IFCI, ICICI, LIC etc…are the
examples .
The various regulatory bodies related with the public issue are:
2. Public Issue
Meaning
Public issue or public offer is a company that issues additional securities to the public, adding to
those currently being traded.
Public issue with prospectus is the most popular method of raising funds by the public limited
companies. Public issue of securities means the selling or marketing of securities for subscription
by the issue of prospectus. The price at which securities are offered for sale is at the face value of
the share in case of new companies and may be premium or discount in the case of old
companies. Legally, no public limited company can issue shares to the public without issuing
prospectus.
(i)issue of prospectus
Prospectus means any document described or issued as prospectus and includes any notice,
circular, advertisement. So, a prospectus is an invitation to the public to subscribe the shares or
debentures of a company.
Contents Of Prospectus
A. General Information
3.Right issue
Right issue involves selling equity/securities in the primary market to existing shareholders.
The shareholders have no legal binding to accept the offer and they have the right to renounce
the offer in favor or any person. Shares of this type are called right shares
4.private placement
1. Cost effective
2. Time effective
3. Structure effectiveness
4. Access effective
5.Preferential allotment
It is an issue of equity by a listed company to selected investors at a price which may or may not
be related to prevailing market price. It is not a public issue of shares. This kind of preferential
allotment is made mainly to promoters or friends and relatives.
Pricing :- price of preferential allotment must not be lower than 6 months average closing price.
Lock in period :- the shares allotted under preferential allotment process will attract a lock in
period. If it is allotted a promoter, the lock in period will be 3 years and to others, it is 1 year.