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    Application: Stock Exchange Initial Public Offering

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    Maika J. Pudadera
    The owners of a private company can sell shares of the company through an initial public offering to raise additional capital for new projects or reduce their ownership stake. When a company goes public, shareholders receive a fraction of ownership, potential profits, and voting rights to elect board members who make daily decisions for the company. Majority shareholders maintain effective control even when other investors own shares.

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    Application: Stock Exchange Initial Public Offering

    Uploaded by

    Maika J. Pudadera
    12 views1 page
    The owners of a private company can sell shares of the company through an initial public offering to raise additional capital for new projects or reduce their ownership stake. When a company goes public, shareholders receive a fraction of ownership, potential profits, and voting rights to elect board members who make daily decisions for the company. Majority shareholders maintain effective control even when other investors own shares.

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    The owners of a private company can sell shares of the company through an initial public offering to raise additional capital for new projects or reduce their ownership stake. When a company goes public, shareholders receive a fraction of ownership, potential profits, and voting rights to elect board members who make daily decisions for the company. Majority shareholders maintain effective control even when other investors own shares.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    12 views1 page

    Application: Stock Exchange Initial Public Offering

    Uploaded by

    Maika J. Pudadera
    The owners of a private company can sell shares of the company through an initial public offering to raise additional capital for new projects or reduce their ownership stake. When a company goes public, shareholders receive a fraction of ownership, potential profits, and voting rights to elect board members who make daily decisions for the company. Majority shareholders maintain effective control even when other investors own shares.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Application[edit]

    The owners of a private company may want additional capital to invest in new projects within the
    company. They may also simply wish to reduce their holding, freeing up capital for their own private
    use. They can achieve these goals by selling shares in the company to the general public, through a
    sale on a stock exchange. This process is called an initial public offering, or IPO.
    By selling shares they can sell part or all of the company to many part-owners. The purchase of one
    share entitles the owner of that share to literally share in the ownership of the company, a fraction of
    the decision-making power, and potentially a fraction of the profits, which the company may issue
    as dividends. The owner may also inherit debt and even litigation.
    In the common case of a publicly traded corporation, where there may be thousands of
    shareholders, it is impractical to have all of them making the daily decisions required to run a
    company. Thus, the shareholders will use their shares as votes in the election of members of
    the board of directors of the company.
    In a typical case, each share constitutes one vote. Corporations may, however, issue different
    classes of shares, which may have different voting rights. Owning the majority of the shares allows
    other shareholders to be out-voted – effective control rests with the majority shareholder (or
    shareholders acting in concert). In this way the original owners of the company often still have
    control of the company.

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