Capital is a very important element for any business. As mentioned in the previous article, different types of companies come into picture when a company goes public through the initial public offering.
Top reasons for a company to become an IPO are
*Maximizing market share
*Increase popularity
*Increase Company's worth
*Gaining profits
Initial Public Offering is a procedure in which an unlisted company will get a right to trade its shares in a Primary Market. It means that an unlisted company will get listed either on National Stock Exchange or Bombay Stock Exchange (Trading with respect to India).
So, the procedure for IPO (Initial a Public Offering) is regulated by SEBI (Security Exchange Board of India) Consider the example of the boutique as we did earlier.
So, if the boutique wanted to go public, it should have a turnover of at least Rs.3 crore rupees.
SEBI basically looks into certain prerequisites when a company has to go IPO. Let me brief you in four easy steps about the procedure of an IPO.
Number 1
The boutique must select an investment bank to see if the company is worth going public and start trading its shares to people. The investment bank will basically act as an underwriter.
• Underwriters are said to be intermediates who work with the (SEBI) issuing body to decide the price of the securities(Shares)
Number 2
The boutique must submit the certificate of registration and commencement certificate to SEBI as a verification. The SEBI will go for a background check of the boutique. In the meanwhile, the company will prepare a prospectus.
• A prospectus is a financial document which is submitted as a security to SEBI. It will determine the potential of the buyer and the value of a share.
Number 3
Once the prospectus is ready, the boutique will start declaring that it is going public. The boutique’s growth potential is also mentioned. Once the SEBI is fine with the registration certificate, then it will approve the boutique to go public and will fix the share prices.
Number 4
The prices of the shares will be fixed and finally, the boutique will get listed on Stock exchange (either NSE or BSE with respect to Indian trading)
People tend to buy the shares through DEMAT accounts and these accounts are managed by the investment bankers.
• DEMAT account is an account which allows the people (investors who purchase shares) to hold the shares in an electronic form.
This is how a company will become public in general.
Now, where did this different types of capital come from? How are these Different Capitals used in an organization? Will be explained in my next post
Until then,
Have a great time. 😊😊😊😊
Sneha Polapragada 💓💓💓💓
No comments:
Post a Comment