IPO Process in India

IPO Process in India: Why Small Companies Release IPO

Initial Public Offering (IPO) is not a new term in India. But it has certainly boomed after the web series SCAM 1992. After watching the success story of Harshad Mehta everyone is searching for the IPO Process in India. We all want to either invest in the stock market or sell our IPO in the stock market.

This blog is for all those small companies who want to release their IPO in 2021. Let’s start with a quick introduction:

What exactly is an IPO?

Initial Public offering in simple terms is the first issue of private company shares. Whenever a company decides to go public, it offers to sell its shares at a pre-defined price. By this process, the investors of the company also get a chance to become shareholders in the company. 

The shareholders earn dividends when the company grows along with the capital return, in case the demand for the share increases. Every private limited company gets a choice to either go public or stay private. There is a well-defined process which a company has to follow before going public. Let’s have a look at the process in detail:

The process of releasing an IPO in India

Step 1: Appoint an Investment Bank

An organization looks for direction from a group of underwriters or investment banks to begin the cycle of IPO. Usually, they take administrations from more than one bank. The group will contemplate the organization’s present monetary circumstance, work with their resources and liabilities, and afterwards they intend to oblige the financial requirements. 

An underwriting contract will be signed, which will have all the details about the arrangement, the sum that will be raised, and the securities that will be given. Despite the fact that the writers guarantee on the capital they will raise, they won’t make guarantees. Indeed, even the investment banks won’t bear all the dangers associated with cash development. 

Stage 2: Register with the SEC 

The Company and the writers, together, record the enlistment statement, which includes all the financial information and marketable strategies of the organization. It will likewise need to announce how the company will use the assets it will raise from the IPO and the plan about the protections of the public venture. 

In the event that the enrollment proclamation is agreeing with tougher rules set by the SEC, which guarantees that the organization has unveiled everything that potential investors should know, after that point, it gets a green sign. 

Or, more than likely, it is sent back with remarks. The organization should then chip away at the remarks and document for enlistment once more. 

Stage 3: Draft the Red Herring Document

An underlying plan which contains the estimation of the plausible price per share and different insights about the IPO, is imparted to the individuals who are associated with the IPO. It is known as a red herring document on the grounds that the primary page of the outline contains a clear warning which expresses that this is certifiably not a final plan. This stage tries things out for the IPO among the expected investors. 

Stage 4: Go to a street show 

Before the IPO opens up to the world, this stage occurs over a thrill-packed fourteen days. The chiefs of the Company travel around the nation promoting the impending IPO to the expected investors, generally QIBs. The plan of the advertising incorporates the introduction of raw numbers, which will find the best revenue. 

Stage 5: Time to decide the value of the IPO 

In light of whether the Company needs to skim a Fixed Price IPO or Book Building Issue, the cost or value band is fixed. A fixed value IPO will have a fixed cost in the request report, and the book building issue will have a value band inside which an investor can offer. The number of shares that will be sold will be chosen. The Company ought to likewise choose the stock trade where it is going to list their offers. The Company requests that the SEC declared the registration statement as useful, so that buys can be made.

Stage 6: Available to people in general 

On an arranged date, the outline and application structures are made accessible to the public, on the internet, and offline. Individuals can get a form, from any assigned banks or representative firms. When they fill in the subtleties, they can submit them with a check, or on the internet. SEBI has fixed the time of accessibility of an IPO to the general population, which is typically 5 working days. 

Stage 7: Going through with the IPO 

After the IPO cost is finalized, the partners and underwriters cooperate to choose the number of shares each investor will get. Financial specialists will normally get full securities except if it is oversubscribed. The offers are credited to their Demat account. The discount is given if the offers are oversubscribed. When the securities are allocated, the share market will begin exchanging the Company’s IPO.

And that was a simple 7 step process of how companies release their IPO. 

Want to know more about the princess? Our team of experts is here for your support.

Want to know about the requirements to register an IPO for a private limited company? Stay tuned.

 

 

Types Of Business Organisations In India

Types Of Business Organizations In India

Whenever we plan to start our own startup, one of the biggest confusion or challenges which we come across is; what type of business organization can you register your firm in?

If you are also searching for the answer to this question then you are in the right place.
After the launch of Atama Nirbhar Bharat; Startup culture is booming in our country. We all are excited and enthusiastic to start our own company and to try that special idea which we know will work definitely.
Hence; to support you throughout the process we are here but first, you need to understand what exactly are the different types of organizations as per the corporate law of our country.

We will talk about the two important topics in this blog:

What are the types of business organizations?
How to select the right business organization?

If you are someone who doesn’t like to read much then we have a video for you. Watch the video to understand the entire concept smoothly:

What are the types of business organizations in India:

Proprietorship

A single person will handle the entire business process; management, operations, decision making, profit, and loss. This type of business is easy and quick to set up and it requires a less financial investment to register. The single owner of the company will be liable for everything and it gives creditors the authority to go after the personal assets of the owner.
Looking for Proprietorship Registration? Get In Touch With Us.

Partnership Firm

A company registration process requires a minimum of 2 partners and a maximum of 100. The partners of the firm can decide the terms of the partnership like a share of profit and loss. The company will have its own identity; a PAN card will be generated on the name of the company.
Want To Register Your Partnership Firm? We are here.

Corporation

A business firm that has its own legal identity other than its owners. The ownership of the company mostly decided by the shares a person holds in the company. The company will have its owners along with a board of directors.
There are 2 types of corporate companies:
Private Limited Company
Public Limited Company
Let’s have a look at each one of them.

Private Limited Company:

A business entity that has a small group of people as its owners. A private limited company will be registered for the pre-defined objects. The company will have owners who are called shareholders. A company which has the aspiration of higher growth opts for private limited registration.
Let’s Register Your Private Limited Company Today!

Public Limited Company:

In very simple terms; a public limited company can be defined as a separate legal entity that trades its shares on the stock exchange. The stocks are then available for the public to buy. A public limited company has to provide its financial position and statistics to the public and maintain transparency with the shareholders.
We specialize in Public Limited Company Registration.

4. OPC (One Person Company)

An OPC is a hybrid of proprietorship and Corporation. If a person wants to be the sole owner of the company but needs corporate structure then OPC is the best option. An OPC has its own legal identity hence the owner will not be liable to any creditors.

Register your OPC with us today.

5. Limited Liability Partners (LLP)

In LLP; The liability of each partner is limited to the amount they have invested in the business. LLPs are most popularly adopted by professional businesses like wealth managers, law firms, and accounting firms.

Want to register your LLP? We are here for you.

How to select the right business organization?

Now that you have a basic understanding of types of business organizations; it’s time to select the right one for you. It is very important to decide on the right organization as the future of your business depends on it.

Consider the following factors before finalizing your business organization:

The requirements of the paperwork along with the costs and expenditure

The first thing to check is the requirements of the paperwork. Take a list of all the documents required for the registration and make sure you have all those available.

Tax Implications

Each business organization has a different taxation process. It doesn’t matter if your company will be small or large you will be required to pay the taxes as per the laws of that organization type.

Transferability of the business in the future

We always want our kids to take over our company. It is important to make sure that the organization type you are selecting will not die with you. Clear the transferability clauses in advance.

Liability protections

We can never think about losing our hard-earned money or property to a failed business plan. So make sure that you are clear of the liabilities of your company and the company has a separate legal identity.
These were just a few factors which we mentioned here, there are a lot of other factors which matter a lot when it comes to selecting the right business organization for your company.

Over To You!!

If you are still thinking about the type of business organizations and which one is the most suitable for your company then we are here for your assistance. Get in touch with us today and we will assist you throughout the process.
Corporate Hub has the perfect team of experienced professionals who can provide a 360-degree solution to your company. Contact us today for any query and we will be happy to help!

What are The Advantages of Incorporation of a Company?

 

Confused about registering your business? Looking for the advantages of incorporation of a company? This article is perfect for you.

Do you know as per the latest report by inc42.com; an average of 15,472 startups got recognition under the Startup India programme launched by our Prime Minister.

Today we all want to work for our own business instead of working for any other person’s company. This is the reason we all are witnessing the growth of startups in our country. 

“So you got an amazing idea for your startup, you came up with the perfect plan to grow it into a successful business and you tried to pitch your idea to a few investors also but they didn’t show much interest so what’s next? “

If you want your potential investors, customers, and employees to take your startup seriously then the first thing you need is to incorporate your company legally. An incorporated startup has more authority and trust as compared to an unregistered startup. 

Our Article is too long to read? You can watch our complete video on the advantages of incorporation of a company:

 

 

Following are 5 advantages of incorporation of a company that will help you to stand out:

 

Create a separate business Identity

If you register a company in India; your company will be declared as a separate legal entity. The following stakeholders can play a major role in the decision making of issues related to the company:

  1. Director: Person who will be managing and controlling the company 
  2. Promoter: Person who actually initiated the setup of the company
  3. Shareholder: Person who has ownership of the company

Assistance in capital generation

You are going to need capital (money) to run your business. You will have two options to get capital:

First is equity capital; which means a person can raise funds through the public. Equity funding is a good option if you want to stay debt-free.

The second option is taking debt in the form of a loan or credit from a bank or private money lending company.

If you have a registered firm then in both cases you will get an upper hand. Your investor (both a bank or public) will found that you are actually serious about your startup and you have already declared it as a legal entity.

Constant Existence

The incorporated company will exist no matter what happens to its owners, directors, shareholders, members, or employees. Moreover; if one of the shareholders or the owners wants to end the company that won’t be possible. One thing to note here is; sometimes the owners or shareholders together decide to end the company. In such cases, the company’s life comes to an end after deciding mutually.

Perpetual existence of companies is beneficial at the time of long term profit planning and growth strategy of the company. The efforts and hard work of all the members of the company can not go waste because one person decided to walk out.

Transfer of ownership of the company  or shares smoothly

If a company is under proprietorship no one can transfer the shares or ownership of a company under any circumstances. But if it is a registered company then you can always transfer the ownership to another person legally by following the right procedure. 

The shareholders also have the authority to encash their shares anytime they want. There are a few restrictions in a private limited company but in a public limited company transfer of share is an easy process.

Limited Liability 

When a person is a sole trader or a proprietor then all the liabilities of the company come on his/her head. Running a business under proprietorship can be risky. But on the other hand; if you are working as an incorporated company then you don’t have any liability on your head. 

A company is a separate entity hence; no single person will get the responsibility or blame for any negligence or issue. Another important aspect here is; all the debts on the company can not be the debt of the owner, director, or shareholder. 

Over to you!

We hope now you must have a clear idea of the advantages of incorporation of a company. If you own a startup and you want to register your company in India then we are here for your assistance.

The Corporate Hub has a team of skilled CS and CA professionals with amazing experience of working with all business niches. We understand the requirement of your startup or business and then we will recommend the right process for you. Moreover; We are here to assist you 24 * 7, 365 days. Whenever you need our support the team will be there to help you out.

Get in touch with us today and get a free quotation for your requirements.