Are you a director of a public limited liability company and thinking of how to issue the shares of your company to the public? do you know the ways that a Plc business can issue shares? there are a number of ways that a Plc business can issue shares, we will like to briefly analyze the most common methods which are:
Right issues can be made when your business has been established for a long time, and by now you are looking for a way to expand, or you are looking to quickly get out of that debt, you might choose this funding option by issuing additional shares to get that cash, but not so fast! you have to jolly well consider your current shareholders, its when they decline buying shares that you can actually go out there and sell your shares, don’t forget, you are answerable to your shareholders first.
if you look around you, rights issues is what most Plc’s are using to to achieve their financial objectives, it is a very common method and can be quite useful for your company, it is common that directors tend to convince existing shareholders to invest in their shares because it will save them advertisement cost, and also they feel more secure the shares goes to the existing shareholders because they know them already and trust their managerial abilities and judgement rather than having to deal with a new person who lacks objectivity and understanding of the company
Offers for sale and public issues
Offer for sale is a method initiated to sell new issues of shares to an issuing house. an issuing house is a financial institution that engages in finding capital for established companies, they launch shares of a new company of a stock exchange, also, shares that are in issue can be sold by issuing house, this occurs when existing shareholders have agreed to sell their shares to the issuing who in turn, sells these shares the public. the sale proceeds are quite certain in this method if issuing shares
This method used is simply inviting the public to purchase its shares and also usually done through advertisements, these shares however, might be newly issued or in existence . this is a very fast way of selling your shares, you also have a larger pool of prospective buyers, public issues also enables the company to, as well, advertise themselves to the public, they can use the opportunity to tell the world what they are into, how their operation has been, as well as their financial stance at that moment, this will not only attract investors, it will also attract other stakeholders, this can also increase the company in terms of image
Issue by tender
This can be done either by the business or the issuing house that is in charge of your shares, they set a particular price for the shares which could be very tricky, this is because the market might happen to be volatile at that particular period, or that the business might have some unique characteristics, however, a tender issue can be made, this entails investors that determine the price at which the shares is to be issued. this method seems to be on the side of the investors more, this is because the shares are negotiable (usually slightly) the initial price is determined by the issue house or company, it will now be tendered to the investors and negotiated upon, the investor will determine the price thereafter, once the price has been received and also recorded, then the issuing house or the company then decide on which price the company should sell the shares.
In this method of issuing, investors are selected within, they are choiced from their character and responsibility towards the organization selling the shares, this is not only a quick way of getting funds, it is also a very cheap method, there is no money for advertisement involved, and also the investors can become more loyal with this method
this option only occurs when you want to convert a part of your equity (reserves) into another (ordinary shares) in this transaction, there is no exchange of cash here, and bonus issues neither benefit your business nor your shareholders.
if you are seeking for short finance as a public limited liability company, you can, consider using the above methods (of course, except the bonus issue), you might also be needing to understand the roles of ‘stock exchange’ and how it can help your company to grow
Listing in stock exchange
stock exchange can help you to issue issue your shares,it can help you to raise capital by selling your shares or loan notes, but before you can make use of the stock exchange, you have to be listed on the stock exchange of your country, it means your business has to meet some requirements that has been laid down by the stock exchange, this could be your profit history, size, as well as information.
if your company is a public limited liability company, it is well advisable to be listed, and also examine the above methods that your company will benefit from, remember, one of the advantages of having a public liability company is that you have a faster chance of getting funds, revitalize your company, cheers!!!