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Articles published on 'Articles Junction Blog' (AJB) are written and published by Sandeep Patil. This blog is updated and maintained by my co-author and webmaster Manoj Patil. Some articles are also contributed by our guest bloggers on a timely manner. We hope you will enjoy reading our articles. We welcome you to submit your suggestions.

Welcome to Articles Junction Blog, a free information portal on variety of subjects and topics that influenced different aspects of my life.

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Process of Initial Public Offering (IPO)

Steps of Initial Public Offering (IPO)


Steps to make an initial public offering (IPO) are given in the image below.↓

Process Involved in Public Offering (IPO)

Image credits © Manoj Patil.


Steps that a company goes through to make an initial public offering (IPO) are follows: ↓

  1. Approval of Board,
  2. Approval of Shareholders,
  3. Lead Manager,
  4. Appointment of Intermediaries,
  5. Expenditure Budget,
  6. Prospectus,
  7. Listing Application,
  8. Agreement with Depositories,
  9. SEC Observations,
  10. Filing with Registrar,
  11. Meeting with Intermediaries,
  12. Advertisement,
  13. Printing of Application Forms,
  14. Receipt of Application,
  15. Allotment.

The purpose of an initial public offering (IPO) are discussed in brief. ↓

1. Approval of Board


In Board meeting, a resolution is passed to raise the capital from public. The Board authorizes the Managing director to undertake necessary activities.

2. Approval of Shareholders


In IPO, the Board convenes (“coming together for an offical or public purpose“) shareholders meeting to approve public issue. For this, special resolution is passed.

3. Lead Manager


In IPO, a lead manager is appointed to look after the various formalities relating to public issue. The company appoints a merchant banker as Lead Manager.

4. Appointment of Intermediaries


In IPO, lead Manager advises the company to appoint intermediaries such as registrar, bankers, brokers, underwriters, etc.

5. Expenditure Budget


In IPO, keeping in mind the guidelines issued by Government on issue expenses, the lead manager prepares the expenditure budget.

6. Prospectus


In IPO, the lead manager prepares a draft prospectus and gets Board's approval. It is then sent to Securities and Exchange Commission (SEC) for approval. SEC places the draft prospectus on the website for public comments.

7. Listing Application


In IPO, the lead manager helps the company in creating a listing application to the stock exchange. Where the shares are to be listed.

8. Agreement with Depositories


In IPO, to provide the facility of offering shares to the public in dematerialization mode, the company has to enter in an agreement with the depositories.

9. SEC Observations


In IPO, within 21 days, SEC makes its observations on a draft prospectus. Stock Exchange can also suggest modifications if required.

10. Filing with Registrar


In IPO, the final draft of the prospectus is to be filed with registrar of companies.

11. Meeting with Intermediaries


In IPO, to get publicity the lead manager and company representatives hold meetings with press, brokers, investors, etc.

12. Advertisement


In IPO, ten days before the opening of the issue, the company releases the advertisement.

13. Printing of Application Forms


In IPO, lead Manager gets application forms printed and dispatched them to brokers, underwriters, etc.

14. Receipt of Application


In IPO, the bankers receive the share applications along with application money. The issue is kept open for a minimum of 3 days and maximum of 21 days.

15. Allotment


In IPO, after the closing of issue, the basis of allotment is finalized. The lead manager ensures all other formalities at the post-issue period (refund orders, etc.). The allotment is finalized with 7 days.






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