Ordinary shares listed on the stock market have classic rights but do not have any preferential rights. Companies listed on the stock exchange may want to list ordinary shares to get more capital share. Companies issuing shares for the first time on the stock exchange also may wish to list ordinary shares by a few different methods, including public offers, offers for sale, offers for subscription, placings and introductions.
A public offer referred to as initial public offer (IPO) has the potential to attract the most amount of capital, but it is a more expensive method for listing shares to the public. Companies new to the stock market seeking large amounts of capital to expand or consolidate their businesses typically use this method. Offers for sales and offers for subscriptions are other components of the initial public offer.
Inviting the public to buy existing shares in a company is an offer for sale. Existing shareholders use to their advantage the float of shares to get rid of all or part of company holdings. Existing shareholders are often able to take advantage of the flotation of shares by combining offers for sale with initial public offers.
An offer to the public to subscribe for new shares in the company is an offer for subscription. This method allows the public to apply directly for shares at a fixed price. Offer for subscription is the other component of an initial public offer along with an offer for sale that permits companies access to new capital.
Placings are shares offered to specific individuals, clients of the sponsor or any securities house handling the placement of shares, but these shares are not offered to the public. Targeting specific investors who are most likely interested in the investment companies appropriately use a placing. A share placing is less expensive than an offer for subscription, which makes it useful when the total value of the offer is low.
Introduction method is available for shares listed on the stock exchange in the United States or abroad with a large number of public shareholders. Introductions are an option for shares held by many shareholders or when the market value enables shares listed to be assumed by other shareholders. Companies internationally traded would qualify for offering introduction shares, since they are likely to be held by many public shareholders.