VARIOUS WAYS OF BECOMING A SHAREHOLDER:
Shares of the company are offered at the stock market at the following stages.
Initial Public Offering (IPO):
When companies offer shares to the general public for the first time it is known as a flotation or an Initial Public Offering (IPO). These shares can be bought directly from the company without paying stockbroker’s commission. You might see an advertisement in a newspaper from a company issuing shares or your stockbroker might tell you about a company making an IPO. Simply fill in the share subscription form and deposit the form along with subscription cheque in a branch of the designated bank(s).
Right shares are issued when companies need to raise additional capital to finance their new expansion projects or to meet working capital needs, etc. In case of rights issues, the existing investors have the right to subscribe to these new shares in proportion to their respective shareholdings.
The most common way of buying/selling in stock market is through trading in the secondary market. Through a stockbroker you can buy shares from existing investors who wish to sell them and vice versa.