How to Write Stock for a New Company

You are running a company that is not listed in the stock exchange but you want to expand and want to gather finances to invest in the new projects. For that purpose, you will have to make the firm public and sell its shares to the general public who will pay you in return. However, remember that the ownership of the firm will be diluted by listing the firm in the stock exchange. The shares that are sold to the general public can be traded at the stock exchange and the ownership will change hands everyday depending on the frequency of transactions that takes place. However, the process of listing the firm at the stock exchange to sell the shares to general public is a bit hectic.

Instructions

  • 1

    Browse for several investment banks. You will have to look at the offers of each bank and find the best mix that suits your situation. Contact the investment bank usually it should be JPMorgan, Chase, CitiGroup, Goldman Sachs, Morgan Stanley and Merrill Lynch. The whole distribution process of the stocks will be hosted by the investment bank and you won’t have to face the trouble of handling the entire sale of the stocks that will go public. The particular investment bank can also be told to list the stock on different stock exchange across the globe. It all depends on your needs and the criteria of the board of directors.

  • 2

    Set an appointment with the chosen investment bank and discuss the type of securities that will be listed at the stock exchange. Two options will be provided by the bank in most circumstances; either you will be offered an agreement of firm commitment or they will settle a best-efforts agreement. The former agreement means that bank will responsible for the sale of the entire stock that you will list even if not the whole lot is old, the bank will compensate for the loss. The latter contains no compensation for the ‘not sold stock’ and it will be returned to the firm for later usage. In the former agreement, a guarantee is provided for the sale of entire stock lot but no guarantee is offered in the latter agreement.

  • 3

    Bank will contact the Securities and Exchange department and complete the legalities required.

  • 4

    The application by SEC will be process and as it is cleared bank will list the stock on the release date.

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