Issuing of additional shares is one of the preferred ways of raising capital from the Stock Exchange, and for joint-stock companies. Companies issuing additional shares need to do all the things required for IPO, such as a decision by the shareholders in order to fund the proposed work plan and its implementation, project presentations and regulators' decisions and disclosure. Issuing additional shares (IPO activity) is likely the lowest-cost financing method for a company with notable advantages over other methods of financing such as loans and bonds. For current shareholders ownership decreases depending on the size of the additional share issue, due to dilution.
The following steps are required to issue additional shares in Mongolia:
- Determine the number for additional shares needed, and prepare the project plan,
- Resolution of shareholders to issue additional shares
- Obtain the required independent assessment findings
- Develop the securities prospectus and underwriting agreement
- Gain regulatory approval and registration
- Organize preemptive
- Organize primary market trades of additional shares
- After the successfuly sale of the additioonal shares, create a report with an overview of all activities
Issuing additional shares require investors to make quick decisions on whether increase their investment, based on current information. Therefore sometimes, issuing no additional shares, and implementing good governance to carry the company forward may be the best choice.