Differentiate among public issue,right issue,bonus issue and private placement.

An Indian company can issue issues in the primary market. These issues can be classified as public or rights, bonus, private placement, and/or public. Right issues by listed companies and public issues require a more detailed process, while bonus issues and private placings are much simpler. Below is an illustration of how issues are classified:

1. Public issue
   • Initial Public Offering (IPO)
   • Follow the Public Offer (FPO).
2. Rights Issue
3. Bonus Issue
4. Private placement
   • Preferential issue
   • Institutional placements for qualified applicants

Public Issue

Public issues are when securities are offered or issued to investors to be part of the shareholder's family. A public issue can further be classified as an Initial Public Offering (IPO) or Follow-On Public Offer (FPO). following given the key features of every type.

• Initial Public Offering (IPO): An IPO is when an unlisted company either issues new securities or sells its existing securities to the public. This allows the issuer to list and trade its securities on the Stock Exchanges.
• Follow On Public Offer (FPO), When a company already listed makes either a new issue of securities or offers to sell to the public, it's called a Follow On Public Offer (FPO).

Rights Issue

An issuer issues securities to shareholders on a date that is fixed by the issuer, i.e. It is known as a rights issue. The rights can be offered in a specific ratio to the securities that were held at the record date.

Bonus Issue

A bonus issue occurs when an issuer issues securities without consideration to existing shareholders on a record date. The Company's share premium or free reserve account is used to issue the shares. This ratio corresponds to the number of securities that were held at the record date.

Private placement

Private placements are the sale of securities to select investors in order to raise capital. Private placements typically involve large banks, mutual funds and insurance companies, as well as pension funds. Private placements are different to public issues, where securities are available for sale on an open market to all investors. There are two types of private placements by listed issuers of convertible securities or shares:

1. Preferential Allotment: When a listed issuer issues convertible securities or shares to a select group of people according to SEBI guidelines, it's called a preferential allocation. In addition to the Companies Act requirements, the issuer must comply with a variety of provisions, including pricing, disclosures in notices, lock-in, etc.
2. Qualified institutions placement (QIP), A QIP is a listing that issues equity shares or convertible securities in to equity shares to qualified institutional buyers. It must comply with the provisions of SEBI guidelines.