Good for Basics..

1. BUSINESS
FINANCE
Jitendra Kumar Yadav
MCA , 2012-2015
Ranchi University
By :-
(Methods of Floating New Issues)

2. CLOUDPUBLISHING
ABC
Contents :~
1. Definition (New issues market)
2. Needs of New Issues
3. Objectives of the New issues
4. Methods of Floating New
Issues

3. New Issues Market
A place where
the shares of any
company are
issued for the very
first time.
It is also Known
as “Primary
Market.”

4. Why New Issues ?
(Needs)Money or Fund :
As
the Food is for
Human ,Money is
the same for a
Company;
without fund it

5. jectives of New Issue
For Promotion :~
For Expansion /Product
Diversification :~
For Working Capital :~

6. he Methods of
Through Prospectus :~
Bought out Deals :~
Private Placements :~
Rights Issue :~
Book Building :~
Floating new Issu

7. 1.Through
Prospectus :~“According to the
‘Companies
(Amendment)Act,19
85’,-Application
forms for shares of
a company should
be accompanied by
a memorandom.”

8. The draft
prospectus contains
all the details
regarding the
company.
It invites offers
for subscription or
purchase of any
shares from the
public.
Which is next sent
to the regional

9. The SE scrutinises the draft
prospectus,after scrutiny if any
clarification is needed then the SE
writes to the company and suggests
for the modifications too.
The draft prospectus contains all
the details regarding the issue,
programmes,openings,closing
,Brokers, underwriters,etc.

10. Merits:-
How a company presents
itself to the public that
works,Infact it is about ‘How
brilliantly one sells onself.’

11. 2.Bought Out
Deals :~The promoter places
his shares with an
investment
Banker/Bought out
Dealer/Sponsor.
Now he offers shares
to the public .
The sponsor can hold

12. Pricing is an essential element to be
decided.
The Sponsor decides the price after
analysing the viability,promoters
background and future projects.

13. Merits :-
=> No wastage of Time and money(good
for small companies).
=> For new companies it is not an easy
task to off-load the shares as per the
SEBI guidelines,thus the Sponsors help
them.

14. Demerits :-
=> Sponsor is the all and whole
,the image processor of a Company.
=> Pricing and insider trading are
carried out ,which can neither be
detected nor penalised.

15. 3.Private
Placement :~
The issue is placed
into small numbers
of Financial
Institutions,Corpora
te bodies,etc.
The financial
intermediaries
purchae the shares
and sell them to

16. No need of Underwriting as the terms
of issues are already negotiated
between company and purchasing
intermediaries.

17. Merits :-
=> Time Effective.
=> Cost Effective.
=> Structure Effectiveness.
=> Accesss Effective

18. .Rights Issue :~
According to the
Section-81 of
Companies Act,1956,
“If a company wants
to increase its
subscribed capital by
allotment of further
shares after two years
from the date of its

19. It should offer shares at first to
its existing shareholders in
proportion to shares held by them
at the time of offer.
The shareholders are not legally
bounded to accept the offer,they
have the right to reanounce the
offer in favour of any person.

20. Conditions to issue rights share :-
(As
dictated by the SEBI)
=> Rights shares must be offered to
the equity share holders first in
proportion to capital paid on those
shares.
=> A notice should be issued to

21. => The time given to accept the right
issue should not be less than 15
days.
=> The notice should also state the
rights of the shareholders to
renounce the offer in favour of
others.

22. => After expiration date given in the
notice ,the board of directors has to
dispose the unsubscribed shares in such
a manner as they think most beneficial
to the company.

23. .Book Building :~
A method that
resembles like
survey/keeping
records.
The Promoter’s
representatives/
employees used to
visit public.

24. They made their plans ,
pricing,...etc, keeping the public
interest and their opinion in
mind.

25. Thank you!