A public limited company intends to raise long-term equity capital by issuing new shares to the public on the primary capital market. What is the correct chronological sequence of steps involved in completing this initial public offering process?
- 1Preparation and publication of an official prospectus outlining company details and offer terms
- 2Submission of application forms and subscription funds by public investors through receiving agents
- 3Allotment of shares to successful applicants and return of monies for oversubscribed shares
- 4Listing and trading of the newly issued shares on the floor of the stock exchange
Answer
The correct sequence starts with the publication of the prospectus, followed by investor application submission, followed by share allotment by the issuing house, and concludes with listing the shares for trading on the stock exchange.
The issuance of new securities in the primary capital market begins with publishing a regulatory prospectus to inform the public. Interested investors then apply and deposit subscription monies. After the subscription window closes, the issuing house processes share allotment and returns funds from oversubscriptions. Finally, the newly created shares are listed on the secondary market (stock exchange) to enable subsequent trading among investors.
Step-by-Step Solution
Key Concept
Primary Capital Market Public Share Issuance Process