General Public Distribution
Candlefocus EditorThe company typically makes the distribution of shares through an official underwriter that supports the company’s marketing and offering plan. This can range from full-scale IPO support, to an online crowdfunding platform. Strict regulations by the US Securities and Exchange Commission (SEC) require the underwriter to pass on the financial information of the company to potential investors and provide an independent analysis of the company’s competitive position in the market.
By issuing new shares, private companies can generate capital and create market liquidity for their early investors. The company can sell the newly issued shares to investors in the primary market and, once sold, the investors can further trade these shares among each other in the secondary market. The generated capital can help the once-private companies to fund their continued business growth as well as fund potential research and development.
Once the company has completed its initial public offering, it is open to the public financial disclosures such as reporting on the financial performance of the company. However, publicly traded companies need to face stricter regulations, such as those related to executive compensation, insider trading and shareholder protection. In addition, the company is also liable to pay taxes.
A general public distribution is certainly not easy. It entails a long and complex process, but it’s essential for the development of companies. It can provide essential capital resources necessary for the future growth of the business, as well as provide needed liquidity for early investors. The offering of shares in the market can also help companies acquire more credibility, visibility, and increase market attention and shareholder value.