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John Moffat.
John Moffat.-
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dennissherpa101
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The notes says that placing is a way unquoted companies can issue new shares. However the notes also 25 % should be available to general public . If it is an unquoted company how can shares be made to the general public. and is placing a sources of finance for unquotes company as well?
John Moffat
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I do not know which notes you are referring to – certainly not ours!!
A placing can be a way of an unquoted company becoming a quoted company. They will not remain unquoted.
dennissherpa101
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isn’t placing life issuing new shares to bank which they have reserved for their customer? Sir or have I understood it wrong. If then Can you correct me. And how it is a way to become quoted company? since its just shares reserved for the bank?
John Moffat
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Usually when a company issues new shares they are offered to the general public so anybody can apply to buy them. However there is the risk that not enough people want to buy them and that therefore the company does not raise as much money as they were wanting.
With a placing, the merchant bank finds in advance people who will buy the shares, so the company is then guaranteed to get at least 75% of the money they need (the other 25% depends on whether enough of the general public want to buy them). The downside of course is that the bank charges for providing this service 🙂
In both cases, because some or all of the shares are being offered to the general public it will usually be done when it is a quoted company.
dennissherpa101
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even with issuing share without placing the bank is involved right sir? the difference is the guarantee. but for an unquoted company to use placing do they need to be of certain size like for an unquoted company to become quoted company. ?
dennissherpa101
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sir in the notes under heading Remain unquoted. new shares can only be issued by way of a rights issue or a private placing? What dose this mean? are the shares issued for partners?
John Moffat
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Usually a merchant bank will be involved in any issue of shares, but it is not compulsory.
Whether a company is quoted or unquoted then a placing is finding specific people who will buy the shares.
If the company is to be quoted then yes, it does need to be of a certain size.
dennissherpa101
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