Question 7.RQ.3: Distinguish between an offer for sale and a public issue of ...
Distinguish between an offer for sale and a public issue of shares.
An offer for sale involves an issuing house buying the shares in the business and then, in turn, selling the shares to the public. The issue will be advertised by the publication of a prospectus that will set out details of the business and the issue price of the shares (or reserve price if a tender issue is being made). The shares issued by the issuing house may be either new shares or shares that have been purchased from existing shareholders.
A public issue is one where the business undertakes direct responsibility for issuing shares to the public. If an issuing house is employed it will usually be in the role of adviser and administrator of the issue. However, the issuing house may also underwrite the issue. A public issue runs the risk that the shares will not be taken up and is a less popular form of issue for businesses.