Generally, for every business we need an investment or capital in order to carry out the operations, purchases and other purposes. In companies, the capital or investment is required and such money is raised from the capital market, SEBI has fixed the guidelines regarding how to raise a fund and the procedure. Companies act, 2013 lays 4 types of raising funds public issue, rights issue, bonus issue and private placement. Where the public issue can be an initial public offer or follow up the public offer. A private issue where the offer to the selective investors like banks, insurance companies, etc. The difference between private and public, is public is an open offer and private is only for the selective investors. A Rights issue is offering the shares to the existing shareholders on a ratio basis. Bonus issues were the issue of shares to the already existing shareholders without any additional costs. All shares are subjected to stamp duty.
S.2(28) of the Companies Act, 2013 defines the term ‘shares’ which means a share in the share capital of the company, which clears that a sum of shares results in share capital. The share capital of the company is divided into the number of indivisible units of a fixed amount. Such units are shares. The shares also have nature of movable property and which can be transferable. S.43 of the act defines the types of share capital, which are two types equity share capital and preferred share capital.