Compendium admissions 2023-25
Initial Public Offer (IPO)
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- Follow on Public Offer (FPO)
- Private Placement
- Terminologies: 1. Alternate minimum tax
| Initial Public Offer (IPO) An initial public offer of shares or IPO is the first sale of a corporate’s common shares to investors at large. The main purpose of an IPO is to raise equity capital for further growth of the business. Eligibility criteria for raising capital from the public investors is defined by SEBI in its regulations and include minimum requirements for net tangible assets, profitability and net-worth. SEBI’s regulations also impose timelines within which the securities must be issued and other requirements such as mandatory listing of the shares on a nationwide stock exchange and offering the shares in dematerialized form etc. Follow on Public Offer (FPO) When an already listed company makes either afresh issue of securities to the public or an offer for sale to the public, it is called FPO. When a company wants additional capital for growth or desires to redo its 8 capital structure by retiring debt, it raises equity capital through afresh issue of capital in a follow-on public offer. A follow-on public offer may also be through an offer for sale, which usually happens when it is necessary to increase the public shareholding in the company to meet the regulatory requirements. Private Placement It refers to issuing large quantity of shares to a select set of investors. According to Companies Act 2013, the number of investors to whom shares are issued under private placement should not exceed fifty. Private placements can be in the form of qualified institutional placements (QIP) or preferential allotment. Terminologies: 1. Alternate minimum tax It minimum tax that is leviable alternative to normal tax. Rate of AMT is 18.5% (plus applicable surcharge and cess). 2. Depreciation/ Amortization Depreciation is the practice of spreading a Tangible fixed assets cost over its useful life. It also reflects the deterioration aspect of the fixed asset overtime. Amortization is the practice of spreading an intangible asset's cost over that asset's useful life. 3. Alpha: It represents the performance of a security over an benchmark (Market indices. It is basically the excess returns earned on an investment above the benchmark return 4. Download 4.08 Mb. Share with your friends:
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