A company can raise funds through issue of securities. Issues of Securities can be classified as a 1. Public 2. Rights or 3. Preferential issues /private placements.
While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler. :
Public offer : “Public offer” includes initial public offer or further public offer of securities to the public by a company, or an offer for sale of securities to the public by an existing shareholder, through issue of a prospectus (Explanation to Section 23).
Private placement: Private placement as any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer-cum-application, which satisfies the conditions specified in this section 42 (Explanation I to Section 42)
Offer for sale (OFS) :
Public Offer includes or an offer for sale (OFS) of securities to the public by an existing shareholder, through issue of a prospectus.
Offer for Sale (OFS) is when the promoters (owner) of a listed company sell their shares to the general public. It is a transparent process which takes place on the stock exchange. Only the top 200 companies as per market capitalisation can initiate an OFS.
Unlike IPOs or FPOs, the concept of OFS is fairly new for Indian investors. The Securities and Exchange Board of India (SEBI) introduced OFS in February 2012. This was following a guideline issued by SEBI that promoters cannot hold more than 75% stake in listed companies. Earlier only promoters could participate in an OFS. But now, any shareholder holding more than 10% shares can offer their shares for sale.
Further issue of Shares:
Refer PPT and YouTube Video Link on Issue of Securities-
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