The issue and placement of stocks
Stocks are allowed to be issued only by companies: PLC (public liability company) and ‘limited’ PLC. This kind of companies may be described as private liability company. They are like PLC, but their stocks may be sold to a new investor only after former investor offered to buy these stocks other former stockholders, and if only they refused, a new investor may become an owner.
Companies issue stocks to meet goals:
— new issue stocks, that is required condition to set up PLC;
— additional issuance of shares:
— to increase statutory fund;
— raise finance to launch a new product;
— enter new owners.
First, stocks are issued on its face value that equal statutory fund. Then they are shared among owners.
Additional issued stocks may be shared among current stockholders, or be sold to a strategic investor or new investors on stock market.
The most inportant detail of a stock is face value. It must be denominated in national currency. Face value is used during IPO.
While selling a stock on secondary market market value matter. It’s determined by supply and demand. If the company goes bankrupt, the money investor receive from selling company assets is proportional to quantity of stocks he holds.