The directors of a company want to modernize its plants and machinery

1.	The directors of a company want to modernize its plants and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.
Answer» (i) I advise the directors to approach a 'consultant' as new issue of shares is not possible through stock exchange. (ii) In stock exchange, buying and selling of previously issued securities is done. (iii) New public issue of shares is the activity of the primary market. So, directors should approach a consultant. (iv) Different methods for new public issue of shares are: (a) Offer through prospectus; (b) Offer for Sale; (c) Private Placement; (d) Rights Issue; (e) e-lPOs.

The directors of a company want to modernize its plants and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.

Answer»

(i) I advise the directors to approach a 'consultant' as new issue of shares is not possible through stock exchange.

(ii) In stock exchange, buying and selling of previously issued securities is done.

(iii) New public issue of shares is the activity of the primary market. So, directors should approach a consultant.

(iv) Different methods for new public issue of shares are:

(a) Offer through prospectus;

(b) Offer for Sale;

(d) Rights Issue;

(e) e-lPOs.