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प्रश्न
Explain 'Private Placement' and 'Rights Issue' as methods of floatation of new issues in the primary market.
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उत्तर
- Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory and non-mandatory expenses. Some companies, therefore, cannot afford a public issue and choose to use private placement.
- Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ‘right’ to buy new shares in proportion to the number of shares they already possess.
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संबंधित प्रश्न
State any four methods of floatation of new issues in the primary market.
'Gujarat Textiles Ltd.' needs to raise a fund of ₹80 crores. It cannot afford the cost of a public issue, so it was decided to allot its equity shares to institutional investors like LIC and some selected investors.
Identify and explain the method of floating new issues used by 'Gujarat Textiles Ltd.'
Which market deals with new securities issued for the first time?
Which group includes the main investors in the primary market?
For which purposes are funds raised in the primary market?
Which rules must a prospectus follow?
Which intermediaries are used in an offer for sale?
In an offer for sale, what do brokers do after the company sells securities to them?
What does selling securities through brokers in an offer for sale help the company avoid?
Who receives securities in a private placement?
Who gets a special right to buy new shares in a rights issue?
How are new shares offered in a rights issue?
How is capital issued to the public through E-IPOs?
What agreement does a company sign for an E-IPO?
Who handles applications and orders in an E-IPO?
Which are additional methods of flotation of securities alongside offer through prospectus and offer for sale?
