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ISSUE OF SECURITIES BY COMPANIES [SECTION 23]
A company can raise capital by issuing securities. The term securities here has same meaning as given in clause (h) of section 2 of the Securities Contract Regulation Act, 1956 (SCRA).
There are separate legal methods for public and private companies for issuing securities.
Issue of Securities by Private Company:
A private Company may issue its securities:
i. By way of right or bonus issue; or
ii. Through private placement.
Issue of Securities by Public Company:
A Public company may issue securities:
i. To public through prospectus which will be called “Public Offer”;
ii. Through private placement;
iii. Through right or bonus issue.
The term “public offer” includes “initial public offer”; or “further public offer”; or “Offer for sale of securities to the public by an existing shareholder” through issue of a prospectus.
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