Security issuance

Security issuance is the process of offering new securities to investors in order to raise funds.

Goals of security issuance:

  1. to increase or to form the charter capital of a company;
  2. to raise financing.

The steps for issuing bonds:

  1. Approval from owners;
  2. Prospectus registration;
  3. Issue brief registration;
  4. State registration of a bond issue;
  5. Placement of bonds;
  6. A report on the results of placement of an issue of bonds is submitted to the republican authority.

Advantages of raising finance by issuing bonds:

  1. Bond interest rate is lower than loan interest rate;
  2. Company sets the term of borrowing;
  3. Diversification of Funding Sources;
  4. Company may set type of interest rate (fixed, variable);
  5. Freedom to operate as company decide;
  6. Improving company’s credit score while timely bond redemption;
  7. Exempting the interest on bonds from income taxation.