Presented by- Manjeet Kumar Choudhary.

(a) Public issue (i) Initial Public offer (IPO) (ii) Further public offer (FPO) (b) Rights issue (c) Bonus issue (d) Private placement (i) Preferential issue (ii) Qualified institutional placement

Public issue means raising funds from public. Promoters of the Company may have plans for the Company, which may require infusion of money. The main purpose of the public issue, amongst others, is to raise money through public and get its shares listed at any of the recognized stock exchanges in India. When an issue / offer of securities is made to new investors for becoming part of shareholders family of the issuer3 it is called a public issue. Public issue can be further classified into Initial public offer (IPO) and Further public offer (FPO).

 When

an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuers securities in the Stock Exchanges.

When an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, it is called a FPO.

When an issue of securities is made by an issuer to its shareholders existing as on a particular date fixed by the issuer (i.e. record date), it is called an rights issue. The rights are offered in a particular ratio to the number of securities held as on the record date.
When an issuer makes an issue of securities to its existing shareholders as on a record date, without any consideration from them, it is called a bonus issue. The shares are issued out of the Companys free reserve or share premium account in a particular ratio to the number of securities held on a record date.

Bonus issue

The sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market. When an issuer makes an issue of securities to a select group of persons not exceeding 49, and which is neither a rights issue nor a public issue, it is called a private placement. Private placement of shares or convertible securities by listed issuer can be of two types:

When a listed issuer issues shares or convertible securities, to a select group of persons in terms of provisions of Chapter XIII of SEBI (DIP) guidelines, it is called a preferential allotment. The issuer is required to comply with various provisions which inter-Alia include pricing, disclosures in the notice, lock-in etc, in addition to the requirements specified in the Companies Act.

Qualified institutional placement When a listed issuer issues equity shares or securities convertible in to equity shares to Qualified Institutions Buyers only in terms of provisions of Chapter XIIIA of SEBI(DIP) guidelines, it is called a QIP.

Money non-refundable except in the case of winding up or buy back of shares. No financial burden i.e. no fixed rate of interest payable. However, in order to service the equity, dividend may be paid. Enhance shareholders value if the Company performs well. Greater Transferability. Trading & Listing of securities at stock exchanges. Better liquidity of securities. Helps building reputation of promoters, Company & its products/services, provided the Company performs well.

Time consuming process. Expensive. Several legal formalities. Involvement of many intermediaries. Transparency requirements and public disclosure of information may lead to lack of privacy. Continuous compliance of provisions of listing agreement and other legal requirements. Constant scrutiny of performance by investors. May lead to takeover of the company Securities of the Company may be made subjective to speculative attacks.

Companies can freely price its securities. Company can not come out with public issue unless all its existing partly paid up shares, if any, are made fully paid up. Before filing the final prospectus, the Company can keep a price band of maximum 20%, it means that if the Company is not sure of the issue price, it may keep a floor price with a price band of 20%. Companies are now free to determine the denomination of shares. Net offer to public should be at least 25% of the issue size. Public issue should be opened for at least 3 working days and not more than 10 working days. The minimum amount to be received from each investor should be Rs. 2000/-. Promoters may at its discretion arrange for buy back facility or safety net facilities in the prospectus subject to the maximum 1000 shares per allotted. The validity of such scheme, if any shall be at least 6 months from the date of dispatch of certificates. Company can come out with an issue within 365 days from the date of observation letter received from SEBI or where such letter is not received, issue can come out with in 365 days from the 22nd day of the date of filing of the prospectus. Trading of securities of all new public issues will be in dematerialized form only.

Since private placements do not require the assistance of brokers or underwriters, they are considerably less expensive and time consuming. private placements may be the only source of capital available to risky ventures or start-up firms. The private placement offering remains one of the most viable alternatives for capital formation available to companies. private placement may also enable a small business owner to hand-pick investors with compatible goals and interests.

Suitable investors may be difficult to locate, for example, and may have limited funds to invest. In addition, privately placed securities are often sold at a deep discount below their market value. . Companies that undertake a private placement may also have to relinquish more equity, because investors want compensation for taking a greater risk and assuming an illiquid position. Finally, it can be difficult to arrange private placement offerings in multiple states.