Process of issuing a stock (2024)

Learn about the process of issuing a stock.

As we’ve stated before, firms will issue stock to raise capital for a variety of business decisions. It is important to note that a firm might also choose to issue bonds, or other sources of financing. This section will focus on the processes a firm undertakes when they decide to issue stock as a source of capital.

Firms can raise capital in several different ways. The most common ways are discussed below: [1]

Private placement: These are usually done through an investment bank or a stockbroker, and typically the purchaser will be high-net-worth individuals / institutional investors. These methods are typically used by unlisted companies (those not on the stock exchange).

Rights issue: These are shares that are offered to existing shareholders. They will usually be made on favourable terms to the existing shareholders, such as a discount to the current share price.

Stock exchange listings: Businesses can offer capital through issuing shares of the stock exchange if they are listed, known as ‘new stock issues’. Listed stocks can be purchased through a broker by any member of the public.

  • If the company is unlisted, it can offer shares through an initial public offering (IPO):
    • Typically, an investment bank or stockbroker will be appointed to assist in the process – they will determine the market demand that is out there, assist in preparing the company financials, and assist in the prospectus preparation.
  • Steps usually involve:
    • analysis of the funding needs
    • appointment of an underwriter and timetable
    • due diligence by a financial adviser
    • determining the offer structure and pricing
    • developing a marketing strategy
    • preparation and marketing of prospectus
    • receipt of funds
    • approval by stock exchange
    • listing of stock.

Read pages 19–23 of the Maddocks guide on how to prepare for an IPO.

Read: A guide to listing & the IPO process in Australia [2]

Below provides some insight into the timelines of an IPO listing on the Australian Stock Exchange.

Process of issuing a stock (2) Click to enlarge

Process of issuing a stock (3) Click to enlarge


1. How businesses raise financial capital [Internet]. BC Open Textbooks. Available from:

2. A guide to listing & the IPO process in Australia [PDF]. Australian Stock Exchange; 2018 Sep. Available from:

This article is from the online course:

Financial Analysis for Business Decisions: Cash Flow Management

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Process of issuing a stock (2024)


What is the process of issuing stock? ›

This involves creating new ownership units in the company and selling them to investors. Issuing new shares involves several steps, including determining the number of shares to issue, setting the price, finding buyers, and completing the transaction.

What is the process of stock? ›

The process begins with selecting an individual or company to trade, known as a broker. Then, a Demat account is opened, an order is placed, which is then carried out by the broker and is ultimately settled by the buyer and seller.

What is the procedure for issuing shares? ›

Issue of Prospectus, Receiving Applications, Allotment of Shares are three basic steps of the procedure of issuing the shares. The process of creating new shares is known as Allocation or allotment. Let us see the two types of shares of a company and the procedure for issue of shares that a company must follow.

How does stock get issued? ›

Companies typically begin to issue shares in their stock through a process called an initial public offering, or IPO. (You can learn more about IPOs in our guide.)

What is issuing procedure? ›

Issuing process refers to the initial phase of the prosecution where the charges are laid before a judicial officer and the accused is notified of the existence of the charges.

What is an example of issuing stock? ›

Example 1: A corporation issues 1,000 shares of $1 preferred, $100 par stock for $105 per share. Example 2: A corporation issues 1,000 shares of 1% preferred, $100 par stock for $105 per share. The extra dollar or percentage information given relates to the cash dividend amount per share on the preferred stock.

What are the 7 steps of stock making? ›

How to Make Stock or Broth
  • Step 1: Meat Trimmings. Butcher a chicken to obtain bone and meat remains. ...
  • Step 2: Cover in Water. Cover the meat and bones in cold water. ...
  • Step 3: Heat the Water. ...
  • Step 4: Skim. ...
  • Step 5: Simmer. ...
  • Step 6: Cut Vegetables. ...
  • Step 7: Add Vegetables and Herbs. ...
  • Step 8: Simmer Down.

What is the new issue process? ›

A new issue is conducted as a means of raising capital for a company. Firms have two main choices issuing debt or issuing equity in the form of stock (i.e., selling a portion). Regardless of which route they take, they will be making a new issue when those securities are offered for sale.

What are the 3 ways of issuing shares? ›

The following are some of the key methods of issuing shares:
  • Private Placement.
  • Offer for Sale.
  • Sale through Intermediaries.
  • Sale to Inside Circle.
  • Sale through Managing Brokers.
  • Privileged Subscriptions.
  • Public Issue or Initial Public Offer (IPO).
Oct 7, 2023

What is right issue example? ›

For example, the stock you bought recently has declared a 1:5 rights issue. This means you have the option to buy one new share for every five shares you currently own. For instance, if you hold 300 shares, you are eligible to purchase 60 additional shares at a predetermined price set by the company.

What happens when you issue stock? ›

When stock is issued by a corporation, two accounts must be adjusted on your business's balance sheet to record the transactions. The cash account and the stockholder's account are both impacted by stock issues. Money you receive from issuing stock increases the equity of the company's stockholders.

What does when issued stock mean? ›

Meaning of when-issued share in English

a share or stock that has official permission to be bought and sold but is not yet officially available for sale, although unofficial trade has begun: The when-issued shares begin trading on Tuesday.

What is the process of issuing shares to the public for the first time? ›

Initial public offering (IPO) is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to increase, but can also be done by large privately-owned companies looking to become publicly traded.

What is the process of issuing a company's shares to the public for the first time? ›

An IPO is an initial public offering, in which shares of a private company are made available to the public for the first time. An IPO allows a company to raise equity capital from public investors.

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