floatation of new sharesrules for floatation of

Question

Floatation of New Shares

Rules for floatation of new shares

1. The company must contain an issued share capital of at least Kshs.20 M.
2. The company must contain complete profits throughout the last 3 years.
3. At least 20 percent of issued capital or capital to be issued must be provided to the public
4. The firm should issue a prospectus such will pride more information to investors to enable them to create informed judgment
5. The market price of the companies share should be determined through the market forces of supply and demand.
6. The company must be registered under Cap. 486 along with registrar of companies.

Note

1. A prospectus is a lawful document issued through a company wishing to increase funds from the public during issue of shares or bonds.
2. It is prepared via directors of the company and submitted to NSE and CMA for approval
3. The CMA has issued rules relating to the contents and design of the prospectus, as well to those enclosed in the Companies Act.

It must give details on like:

1. Number of shares to be issued
2. Offer or issue price per share
3. The dates during that the other is open or valid
4. Financial statements of the firm presetting EPS and DPS for the last five years
5. Action report etc.
6. Action may be in use against the directors whether the prospectus is fraudulent.