Types of Capital Issues in the Primary Market

Capital markets are financial markets where financial securities and assets are bought and sold. Capital markets may include trading in bonds, derivatives, and commodities, in addition to stocks. A stock market is a particular category of the capital market that only trades shares of corporations.

The primary market is predominantly known as the “new issue market,” where public companies issue new securities to the public for the first time. In the case of equity, this process is known as an Initial Public Offering (IPO), while for debt instruments, it involves issuing bonds or debentures.

Other types of capital issues in the primary market can be Private Placement · Preferential Issues · Qualified Institutional Placement · Rights and Bonus Issues. Once the company receives the money, it issues the certificate to the investor. The share certificate acts as a receipt for the purchase and ownership of shares in the company. The document certifies registered ownership of shares from a particular date. Currently, securities are issued to the shareholders in their Demat Account maintained in the depository. Demat form of share certificates eliminates the need to issue paper certificates.

The securities can be issued at face value, premium value, or par value.

Surendra Naik

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Surendra Naik

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