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Question
Answer in brief.
What is Book Building Method?
Solution
Book Building Method is one of the pricing methods that a company can use for Public issues or offers.
- Under this method, the issuer company determines the number of shares and the issue price at which its shares will be sold by the bidding process.
- The company issues a Red Herring Prospectus which contains a price range or price band and asks the investors to bid on it.
- Here, the minimum price of the bid is called 'Floor Price' or 'Ask Price, and the maximum price of the bid is called 'Cap Price or 'Bid Price'.
- The final price at which shares are offered to the investors is called as 'Cut-Off price. The bids along with the application money are to be submitted to the Lead Merchant Bankers called 'Book Runners' who enter the bids in a book.
- After bidding is over, the company fixes 'cut off-price based on the highest or best price at which all shares on offer can be sold.
- The company issues a prospectus that contains the final price. Book building method is used for public issues i.e. IPO and FPO.
RELATED QUESTIONS
Select the correct answer from the options given below and rewrite the statement.
Voluntarily giving away one’s share to another person is called as______of shares.
State whether the following statement is true or false.
The member transferring shares is called as transferor.
Complete the sentence.
The two parties involved in transfer of shares are transferor and ______
Complete the sentence.
In case of transfer of shares, company has to issue to the transferee a new share certificate within ______
Answer in one sentence.
Name the parties involved in transfer of shares.
Explain the following term/concept.
Transfer of shares
Explain the following term/concept.
Blank transfer
Explain the following term/concept.
Forged transfer
Distinguish between the following.
Transfer of Shares and Transmission of Shares
Answer in brief.
State the provisions for Rights Issue.
When can the Board of Directors refuse the transfer of shares?
Answer in brief.
What is transfer of shares?
Justify the following statement.
A member of a Public company can transfer shares.
Justify the following statement.
The Board of Directors can refuse transfer of shares.
