Under the method of offer for sale, securities are not issued directly to the public. Through whom are they offered for sale?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Issuing houses or stock brokers
Option (1) Issuing houses or stock brokers — Correct. In an offer for sale, the company sells the securities en bloc to intermediaries like issuing houses or stock brokers. They resell the securities to the investing public.
Option (2) Registrars to the issue — Incorrect. A registrar to the issue is appointed by the company in an e-IPO. It has electronic connectivity with the exchange.
Option (3) Depository participants — Incorrect. A depository participant opens and keeps the investor’s demat account. It is used for holding and transferring securities after they are bought.
Option (4) Development banks or commercial banks — Incorrect. Development banks and commercial banks are institutions of the capital market. They are not the intermediaries named for an offer for sale.
NCERT (Pre-rationalised Edition): “PRIMARY MARKET … There are various methods of floating new issues in the primary market :” “2. Offer for Sale: Under this method securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers. In this case, a company sells securities enbloc at an agreed price to brokers who, in turn, resell them to the investing public.” |