Question

What are the possible ways for first time sale of securities by a company?

Answer 1

The following are the ways for the first time sale of securities by a company:

1. Public Issue:t is one of the most popular ways to issue securities to the general public. Through an IPO, the company is able to raise funds, and the securities are listed on the stock exchange for trading purposes

2. Rights Issue: At a time when a company decides to raise more capital from existing shareholders, it offers the shareholders more shares at a discounted rate than the prevailing market price. The number of shares offered is on pro-rata basis, and this process is known as a Rights Issue.

3. Preferential Allotment

When a listed company issues shares to a few individuals at a price that may or may not be related to the market price, it is termed as a preferential allotment. The company decides the basis of allotment and is not dependent on any mechanism such as pro-rata or anything else.prevailing market price. The number of shares offered is on pro-rata basis, and this process is known as a Rights Issue.