1. IntroductionCompanies raise funds to finance their projectsthrough various methods. To promote a new company The promoters can bringtheir own money or To expand an existing company borrow from financialinstitutions or mobilise To diversify the productioncapital by issuing To meet the regular workingsecurities. The funds maybe raised through issue of capital requirements fresh shares at par, premium and discount. To capitalize the reserves The main objectives of a capital issue are given below:

2. Parties involved in the new issue Drafting the prospectus Managers Preparing the budget of expenses related to the issue Suggesting the appropriate timings of the public issue Assisting in marketing the public issue successfullyto the Advising the company in the appointment of registrars to the issue, underwriters, brokers, etc.issue: Directing the various agencies involved in the public issue. 3. Registrar to the issue After the appointment of the lead managers to the issue, in consultation with them the registrar to the issue is appointed. Quotations containing the details of various functions they would be performing and charges for them are called for selection. 4. underwriters Aspects Experience in primary market considered Past performance before Outstanding underwritingselectingcommitment underwriter The network of underwriter His overall reputation are 5. Bankers to the issue Bankers to the issue have the responsibility of collecting the application money along with the application form. If the size of issue is too big 3 or 4 bankers may be appointed. 6. Advertising agents They advertise for the issue. A comparative analysis is done for to find suitable advertisement agent from the agents available. 7. The financial institutions They generally act as underwriters and provide long term loans to the company 8. Govt. and statutory agenciesSEBIRegistrar of companiesRBIStock exchangesIndustrial licensing authoritiesPollution control authorities 9. Collection centres Generally there should be at least 30 collection centers inclusive of places where stock exchanges are located. 10. RegionExchangeCityNorthern region Ludhiana stock exchange LudhianaDelhi stock exchangeDelhiJaipur stock exchange JaipurU.P. stock exchange KanpurSouthern region Hyderabad stock exchangeHyderabadBanglore stock exchange BangaloreMangalore stock exchangeMangaloreMadras stock exchange ChennaiCoimbatore stock exchange CoimbatoreCochin stock exchange cochin 11. Region ExchangeCityEastern region Calcutta stock exchange Calcutta Gauhati stock exchangeGauhati Magadh stock exchange Patna Bhubaneshwar stock exchange BhubaneshwarWestern region Bombay stock exchange Mumbai National stock exchange Mumbai OTCEI stock exchangeMumbai M.P. stock exchange Indore Pune stock exchange Pune Vadodra stock exchangeVadodra Ahemdabad stock exchangeAhemdabad Saurashtra kutch stock exchange Rajkot 12. Placement of issueOffer through prospectusBought out deal (offer for sale)Private placementRight issueBook building 13. Offer through prospectus According to companies act 1985, application forms of shares of a company should be accompanied by a memorandum. In simple terms a prospectus document gives details regarding the company and invites offers for subscription or purchase of any share or debentures from the public. The draft prospectus has to be sent to the regional stock exchange where the shares of company are to be listed and also to all other stock exchanges where the shares are proposed to be listed. The stock exchange scrutinies the draft prospectus. After scrutiny if there is any clarification needed, the stock exchange writes to the company and also suggest modification if any. 14. Salient features of prospectus are: Name and address of the registered office of company The name of stock exchanges where applications have been made for permission to deal in and for official quotation of sharesGeneral Opening closing and earliest closing date of information:- issue Name and address of lead managers Name and addresses of trustees under debenture trust deed Rating if obtained from CRISIL 15. 2. Issued subscribed and paid up capital Size of present issue giving separately Capitalreservation for preferential allotmentto promoters and others.structure Paid up capital- After the present issueof After the conversion of debenture (IV) Details regarding the promoterscompany contribution 16. 3. Authority for the issue, terms ofpayment, procedure and time schedule Termsfor allotment, issue of certificate andrights of the instrument holder. of the How to apply- availability of forms,prospectus and mode of payment. Special tax benefits to the company andpresent shareholders under the income tax act ifany issue 17. Particulars of the issue(I) objects of issue(II) Project cost(III) Means of financing (including promoterscontribution) 18. History of present business Subsidiary companies if any Promoters and their background5. Company Name and address of M.D. Location of projectmanagement Plant and machinery, technological process etc.and project Collaboration, any performance guarantee bycollaborators Infrastructures facilities for raw material andutilities 19. (IX) Schedule of implementation(X) The productof project and progress so far Nature of product. Industrial/ consumer Approach to marketing and proposed set up Export possibilities and export obligations (XI) Future prospects (XII) Stock market data for shares 20. 6. Particulars about other listed companies under the same management if any7. Details of outstanding litigations pertaining to matters likely to affects theoperations and finances of the company including dispute tax liability if any8. Management perception of risk factors like sensitivity to foreign exchange ratefluctuations9. Justification of the issue premium.10. Financial information11. Statutory information 21. Bought out deal Here the promoter places his shares with an investment banker who offers it to the public at later date. In other words in a bought out deal, an existing company off-loads a part of the promoters capital to a wholesaler instead of making a public issue. In addition to main sponsor, there could be individuals and other smaller companies participating in the syndicate. The hold on period may be as low as 70 days and as long as one year. 22. Private placement In this method issue is placed with a small no. of financial institutions, corporate bodies and high net worth individuals. The financial intermediaries purchases the shares and sell them at a suitable price to investors later. 23. Right issueAccording to sec 81 of companies act 1956, if a public company wants toincrease its subscribed capital by allotment of further shares after twoyears from date of its formation or one year after date of first allotment.It should offer shares at first to the existing share holders in proportionto the shares held by them at the time of offer.According to section 81, the company has to satisfy certain conditions toissue right shares. In same proportion of their holding Time not less than 15 days After the issue the shares can be disposed in a way beneficial for company. 24. Book buildingBook building is a mechanism through which the initial publicofferings take place in U.S. In this process the price determination isbased on order placed and investors have an opportunity to placeorders at different prices as practiced in international offerings.In this process book runner is appointed and his name is mentionedin the draft prospectus. The book runner has to circulate the copy ofthe draft prospectus to be filed with SEBI among the institutionalbuyers who are eligible for firm allotment. The draft prospectusshould indicate the price band within which the securities are beingoffered for subscription. 25. The offers are sent to book runners. He maintainsa record of the names and number of securitiesoffered and the price offered by the institutionalbuyer with in the placement portion .Underwriters should also intimate the ordersreceived by the him within the placement portionand the price for which the order is received tothe book runner. The price is finalized by bookrunner and the issuer company. 26. Allotment of shares At par At premium At discount 27. Factors to be considered beforeinvesting Promoters credibility Efficiency of managementProject details ProductFinancial data Risk factors Auditors reportStatutory clearance Investors service 28. Investors protection in the primarymarketThe principal Provision of all the relevant ingredients information Provision of accurate ofinformation investors Transparent allotmentprotection procedures without any biasare: 29. To provide the above Project appraisal Underwriting mentioned Disclosures in prospectus factors Clearance by stock exchangeseveral steps Signing by board of directors have been SEBIs roletaken. They Redressal of investor grievances are: 30. Factors needed to make theinvestor protection effectiveInvestors awarenessStrict norms for premium fixationSafety netsPunitive actionPromoters stake 31. Recent trends in the primarymarketAggressive pricingGood liquidityLow returnsLow volumeEconomic slow down