How Do Shares Come Into Being?

As we have discussed in our previous lesson the financial cycle of business about how different businesses raise funds to expand their business.

We also talked about why and how companies issue shares to the general public. If you haven’t read that lesson then I would highly recommend you to read that first before you move ahead reading this post.

So, let’s move ahead to learn about How Do Share Come into Being?

How Do Shares Come Into Being?

Whenever a Private Limited Company needs to raise more funds for the expansion of their business then they goes to the public and raise funds by issuing equity shares in return through Initial Public Offering also known as IPO’s at stock exchanges.

These companies shares are also further traded within public through different Stock Exchanges in India.

In this way, shares come into being through IPO, but it’s not that easy, firstly these companies have to show their financial reports and must get all the necessary approvals from the Securities and Exchange Board of India (SEBI) and also the stock exchanges where they will get listed.

Well, this is all about how do shares come into being, if you want to get little more deep into this, then you must read the previous lesson on financial cycle of business (I hope you have already done so, as I recommended before)

I will also post more lessons on how stock market functions and also more insights on Initial Public Offer (IPO’s) and about the Security and Exchange Board of India in my next course.

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