Primary market
Primary issuance can take the form of shares, bonds or other instruments. The issuer receives proceeds net of relevant costs and assumes the corresponding ownership or contractual consequences. Pricing, subscription risk and regulatory requirements matter. A primary offering may be public or directed to selected investors; it is not limited to an IPO. Distinguish new issuance from an existing shareholder selling a holding, where proceeds go to that shareholder rather than to the company.
Worked example
A business issues 1 million new shares at $2, raising $2 million before issue costs. If a founder simultaneously sells 200,000 existing shares, the founder's sale proceeds are separate and do not increase the company's cash.
Common mistake
Assuming every sale during a public offering represents new securities and company fundraising.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |
