What are the different kinds of issues?

What are the different kinds of issues?

Primarily, issues can be classified as a Public, Rights or Preferential issues

(also known as private placements). While public and rights issues involve a

detailed procedure, private placements or preferential issues are relatively

simpler. The classification of issues is illustrated below:

Initial Public Offering (IPO

fresh issue of securities or an offer for sale of its existing securities or both

for the first time to the public. This paves way for listing and trading of the

issuer’s securities.

) is when an unlisted company makes either a

A follow on public offering (Further Issue)

company makes either a fresh issue of securities to the public or an offer for

sale to the public, through an offer document.

is when an already listed

Rights Issue

securities to its existing shareholders as on a record date. The rights are

normally offered in a particular ratio to the number of securities held prior to

the issue. This route is best suited for companies who would like to raise

capital without diluting stake of its existing shareholders.

is when a listed company which proposes to issue fresh

A Preferential issue

listed companies to a select group of persons under Section 81 of the

Companies Act, 1956 which is neither a rights issue nor a public issue. This

is a faster way for a company to raise equity capital. The issuer company

has to comply with the Companies Act and the requirements contained in

is an issue of shares or of convertible securities by

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the Chapter pertaining to preferential allotment in SEBI guidelines which

inter-alia include pricing, disclosures in notice etc.