BASICS OF FINANCIAL MANAGEMENT

PRIMARY MARKET AND SECONDARY MARKET

Market
Primary Market Secondary Market

HOW DO COMPANIES RAISE FINANCE

Venture capital. Initial Public Offers

Right Issues Follow on Public Offer

Raise Debts from Public Private Place and Private Equity Firm Long/ short Borrowings FDI

PROMOTERS

A corporate promoter (also "projector") is a person who solicits people to invest money into a corporation.
An investment banker, an underwriter, or a stock promoter may, wholly or in part, perform the role of a promoter. Promoters general owe a duty of utmost good faith, so as to not mislead any potential investors, and disclose all material facts about the company's business.

TYPES OF PROMOTERS

Professional Promoters
Occasional Promoters Entrepreneur Promoters Financier Promoters

FUNCTIONS OF PROMOTERS

Discovery of a business idea

Detailed investigation Assembling the factors of production

Entering into preliminary contracts

ROLE OF STOCK EXCHANGES IN CAPITAL MARKET OF INDIA

Effective Mobilisation of savings

Promoting Capital formation Wider Avenues of investment Liquidity of investment Investment priorities Investment safety Wide Marketability to Securities

 Financial resources for public and private sectors

Funds for Development Purpose

Indicator of Industrial Development

Barometer of National Economy

ROLE OF SEBI

To protect the interests of investors through proper education and guidance as regards their investment in securities.
To regulate and control the business on stock exchanges and other security markets. To make registration and to regulate the functioning of intermediaries such as stock brokers, sub-brokers, share transfer agents, merchant bankers and other intermediaries operating on the securities market.

ROLE OF SEBI

To register and regulate the working of mutual funds including UTI (Unit Trust of India).
To promote self-regulatory organization of intermediaries. SEBI is given wide statutory powers. To regulate mergers, takeovers and acquisitions of companies in order to protect the interest of investors. To prohibit fraudulent and unfair practices of intermediaries operating on securities markets

ROLE OF SEBI

To issue guidelines to companies regarding capital issues.

To conduct inspection, inquiries & audits of stock exchanges, intermediaries and self-regulating organizations and to take suitable remedial measures wherever necessary. To restrict insider trading activity through suitable measures.

ROLE OF MERCHANT BANK

Raise funds
Offer advisory services Security distribution

Aid in projects
Overall financial reconstruction

ROLE OF INVESTMENT BANK

Invest clients money

Sales of company stocks. Buy securities. Managing assets and investment portfolios. Offer good financial advice

IMPORTANT CONCEPTS

GDR-A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares, but are offered for sale globally through the various bank branches. ADR: A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction.

IMPORTANT CONCEPTS

Foreign Currency Borrowing.

Bank Loan.