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प्रश्न
Distinguish between the following.
Fixed Price Issues and Book Building
उत्तर
| Fixed Price Issue Method |
Book Building Method |
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1. Meaning: Under this method, the issue price of shares is mentioned in the prospectus and investors have to buy shares at that price only. |
Under this method, the issue price is determined by a bidding process. The investors are given a price band and are asked to bid at a price within the band. This way company arrives at a price at which it will sell its shares. |
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2. Price of Shares: The exact price of shares is known in advance and it is mentioned in the prospectus. |
The price of shares is not known in advance. Only the minimum price and maximum price at which the company is willing to sell the shares are known in advance. |
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3. Prospectus: The company has to issue a prospectus and it contains the details of the price at which shares are offered and the total number of shares offered by the company. |
Company issues a Red Herring Prospectus. It contains only the price band and the total size of the issue. |
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4. Determination of Demand: The company comes to know the public demand for its shares only after the closure of the issue. |
The company can know the public demand for its shares every day. The bids are registered in the book every day until the closure of the issue. |
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5. Payment of Application Money: Application money or the entire money has to be paid by the investor at the time of submitting his application for shares. |
Only application money has to be paid at the time of bidding. The money will be collected only after the issue price has been fixed. |
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6. When Used: It can be used for any issue i.e. Public Issues, Rights Issues, ESOS, etc. |
It is usually used in Public issues i.e. IPO and FPO. |
संबंधित प्रश्न
Select the correct answer from the options given below and rewrite the statement.
______ means shares are offered to the public.
Under _________ method, issue price of shares is based on bidding.
In ________, shares of a company are offered to the public for the first time.
Select the correct answer from the options given below and rewrite the statement.
Bonus shares are issued free of cost to ______
Select the correct answer from the options given below and rewrite the statement.
______ are offered to permanent employees, Directors and Officers of a company.
Select the correct answer from the options given below and rewrite the statement.
Under ______, a company offers its securities to a select group of persons not exceeding 200.
Write a word or a term or a phrase which can substitute the following statement.
Subsequent issue of shares after an IPO.
State whether the following statement is true or false.
Floor price is the highest bid price under Book Building method.
Answer in one sentence.
What is meant by private placement?
Answer in one sentence.
What is the subsequent issue after IPO called as?
Answer in one sentence.
What is Public Issue?
Answer in one sentence.
Name the capital which is mentioned in the capital clause of Memorandum of Association.
Correct the underlined word and rewrite the following sentence:
FPO refers to offering of shares to the public for the first time.
Explain the following term/concept.
Sweat Equity shares
Study the following case/situation and express your opinion.
TRI Ltd. Company is newly incorporated public company and wants to raise capital by selling Equity shares to the public. The Board of Directors are considering various options for this. Advise the Board on the following matters :
- What should the company offer - IPO or FPO?
- Can the company offer Bonus Shares to raise its capital?
- Can the company enter into Underwriting Agreement?
Explain the following term/concept.
Employee Stock Purchase Scheme
Explain provisions that the company must fulfil.
Sai Ltd. Company is newly incorporated public company and wants to raise capital by selling equity shares to the public. The Board of Directors are considering various options for this. Advise the Board on the following matters:
- What should the company offer – IPO or FPO?
- Can the company offer Bonus shares to raise its capital?
- Can the company enter into Underwriting Agreement?
