Issuance of securities :
Security issues by companies are a novel and common way of raising funds that in turn help realize their growth aspirations. It is therefore necessary to discuss the process of issuance of securities, kinds of issues to raise funds from capital market (like IPO, rights issue), and the role of various intermediaries involved in the process.
Kinds of Issue
A company requires capital at various stages during its life cycle and for different reasons. For that purpose, it has to raise capital either from financial institutions as debt or issue and re-issue securities in the capital market. Primarily, a company prefers raising capital through issuing common stock (equity shares). The offer of equity shares can be classified as Public issue, Rights issue 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.
Public issues can be further classified into Initial Public offerings and Further Public Offerings or Follow on Public Offer (FPO). In a public offering, the issuer makes an offer for new investors to subscribe to the issue so as to become a shareholder of the firm. The issuer company needs to make detailed disclosures in its offer document (as per SEBI norms and guidelines for issue of securities) before offering it for subscription to the investors.
Intermediaries to an Issue
Merchant Bankers, Book Running Lead Managers, Investment Bankers, Syndicate Members, Registrars, Bankers, Auditors, Underwriters etc., are the intermediaries to an issue. The issuer discloses all the details pertaining to these intermediaries like addresses, phone numbers etc., before the public issue. In addition to this, the issuer also discloses the details of the compliance officer appointed by the company for the purpose of the issue.