Primary shares
Encyclopedia
In an equity
offering, primary shares, in contrast to secondary shares
, refer to newly issued shares of common stock
that are sold to investor
s. The cash
generated from the sale of the primary shares, net of the gross spread
, are transferred to the company.
For example, in December 2010, KATHMANDU: Chilime Hydropower Company floated 960,000-units of ordinary shares to the local people of Rasuwa district — where the company is located.
Claiming that they have a right to the ownership in the company that is operating in their district, the locals have formed an agitation committee and filed a case at the Supreme Court for their right to be the shareholders of the company.
According to the amended Securities Registration and Issuance Regulation – 2065, hydropower companies must float shares for the locals before they open the issue for general public. A company has to float a minimum of 30 per cent of the shares to the public and out of the 30 per cent, five per cent has to be set aside for the company’s staff, 10 per cent for the locals and remaining 15 per cent will be floated to the general public, the amended regulation said. However, the locals’ shares have a lock-in period of three years. They cannot sell the Chilime Hydropower shares within three years.
These are primary shares that are being offered to the local community who are effectively the shareholders, secondary shares will be sold to the general public at a later date.
http://stock-trading-on-line.com/articles/chilime-floats-primary-shares-to-rasuwa-locals/
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
offering, primary shares, in contrast to secondary shares
Secondary shares
In an IPO, secondary shares refer to existing shares of common stock that are sold to investors in an offering ....
, refer to newly issued shares of common stock
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
that are sold to investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
s. The cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
generated from the sale of the primary shares, net of the gross spread
Gross spread
Gross spread refers to the fees that underwriters receive for arranging and underwriting an offering of debt or equity securities. The gross spread for an initial public offering can be higher than 10% while the gross spread on a debt offering can be as low as 0.05%.For example, if a company sells...
, are transferred to the company.
For example, in December 2010, KATHMANDU: Chilime Hydropower Company floated 960,000-units of ordinary shares to the local people of Rasuwa district — where the company is located.
Claiming that they have a right to the ownership in the company that is operating in their district, the locals have formed an agitation committee and filed a case at the Supreme Court for their right to be the shareholders of the company.
According to the amended Securities Registration and Issuance Regulation – 2065, hydropower companies must float shares for the locals before they open the issue for general public. A company has to float a minimum of 30 per cent of the shares to the public and out of the 30 per cent, five per cent has to be set aside for the company’s staff, 10 per cent for the locals and remaining 15 per cent will be floated to the general public, the amended regulation said. However, the locals’ shares have a lock-in period of three years. They cannot sell the Chilime Hydropower shares within three years.
These are primary shares that are being offered to the local community who are effectively the shareholders, secondary shares will be sold to the general public at a later date.
http://stock-trading-on-line.com/articles/chilime-floats-primary-shares-to-rasuwa-locals/