How does the original owner gets his shares?

#1
sorry to ask this very basic question about an IPO.. i got 2 different answers after searching for some time to the same question.. hope can be enlightened here.. hehe..

for simplicity sake, we assume that there is only one owner of the business.. he owns 100% of the shares, of course, and now he is planning to IPO it..

let say he chooses to IPO only 60% of the company.. does that mean that he will have the remaining 40% to himself (1) FREE or (2) does he need to buy the 40% at some very low value?
 
#3
sooqing said:
sorry to ask this very basic question about an IPO.. i got 2 different answers after searching for some time to the same question.. hope can be enlightened here.. hehe..

for simplicity sake, we assume that there is only one owner of the business.. he owns 100% of the shares, of course, and now he is planning to IPO it..

let say he chooses to IPO only 60% of the company.. does that mean that he will have the remaining 40% to himself (1) FREE or (2) does he need to buy the 40% at some very low value?
Sooqing,
You've tried to oversimplify.
By company law, no one person can have 100% shares in a company. A minimum of two are required. Normally there are many more.
In your query, the original owners got 100% of the shares at the time they invested their capital in the business. They have already paid for 100% of the shares. Then, over the years, they have successfully been able to get the business to a stage where they can go for an IPO. Now they don't have to sell any of their shares. The company will issue additional shares.
Jaspal
 
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