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PUBLIC OFFER- A CRITICAL APPRAISAL

Submitted by – DigvijayaSrivastava Submitted to –Mrs. Nandita Jha


Roll no – 1525, 7th semester, BA. LLB. Faculty of Corporate Law

ROUGH DRAFT SUBMITTED IN PARTIAL FULFILMENT OF COURSE TITLED CORPORATE LAW FOR
COMPLETION OF BA.LLB. (HONS.)

AUGUST 2019

CHANAKYA NATIONAL LAW UNIVERSITY


NYAYA NAGAR, MITHAPUR,
PATNA (BIHAR)
1. Introduction –
A public offering is the sale of equity shares or other financial instruments to the public in order
to raise capital. The capital raised may be intended to cover operational shortfalls, fund business
expansion, or make strategic investments. The financial instruments offered to the public may
include equity stakes, such as common or preferred shares, or other assets that can be traded like
bonds.The SEC must approve all registrations for public offerings of corporate securities in the
United States. An investment underwriter usually manages and/or facilitates public offerings

An initial public offering (IPO) is the first time a private company issues corporate stock to the
public. Younger companies seeking capital to expand often issue IPOs, along with large,
established privately owned companies looking to become publicly traded as part of a liquidity
event. In an IPO, a very specific set of events occurs, which the selected IPO underwriters
facilitate:An external IPO team is formed, including the lead and additional underwriter(s),
lawyers, certified public accountants (CPAs) and Securities and Exchange Commission (SEC)
experts.Information regarding the company is compiled, including its financial performance,
details of its operations, management history, risks, and expected future trajectory. This becomes
part of the company prospectus, which is circulated for review.The financial statements are
submitted for official audit.The company files its prospectus with the SEC and sets a date for the
offering.

A secondary offering is when a company that has already made an initial public offering (IPO)
issues a new set of corporate shares to the public. Two types of secondary offerings exist: the
first is a non-dilutive secondary offering, and the second is a dilutive secondary offering. In a
non-dilutive secondary offering, a company commences a sale of securities in which one or more
of their major stockholders sells all or a large portion of their holdings. The proceeds from this
sale are paid to the selling stockholders. A dilutive secondary offering involves creating new
shares and offering them for public sale.

A public offer is defined under the section 23 of the Companies Act, 2013 as an offer of
securities by a public company through issue of a prospectus. The Companies Act, 2013, s
42 read with rule 14(2)(b) of the Companies (Prospectus and Allotment of Securities) Rules,
2014 specifies that an offer to more than 200 persons (excluding qualified institutional buyers
and employees of the company being offered securities under an employee stock option
scheme) in the aggregate in a financial year will constitute a public offer.
An initial public offer refers to an offer of securities by an unlisted company to the public for
subscription and includes an offer for sale of securities to the public by any existing holder of
such securities in an unlisted company. A further public offer refers to an offer of securities by
a listed company to the public for subscription and includes an offer for sale of securities to the
public by existing holders of such securities in a listed company.
1.1. Objectives –
The aim of this research paper is to present –

1.To critically analyse the concept of public offer.

2.To study about the provisions related to public offer in Company Act 2013.

1.2. Hypothesis –
Public offer is a means by which a company offers its securities through its prospectus.

1. Research Methodology –
The researcher will use doctrinal method of research. The doctrinal sources for this research
paper arebooks, websites, journals, articles written by many authors, along with online research.

1.1. Sources of data collection –


The researcher will be using primary as well as secondary sources of data collection for
collecting the data regarding this project.

1.2. Limitation –
This research project has certain limitations i.e. Time and monetary limitations, as the research
has to be done in prescribed time.

2. Tentative Chapters –

1. Introduction
2. Definition of a Public Offer
3. Kinds of Public Offer : Initial and Secondary
4. Provision for public offer in Company’s Act 2013
5. Conlusion & suggestions