Which of the following methods of floatation of new issues is used by the company when the company directly sells its securities to a limited number of sophisticated investors and at times does not want to disclose information to the open market?
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Private Placement = Direct sale to select investors without public disclosure.
Think: Private = Limited and selective.
Private Placement: A method for companies to raise capital by selling shares or securities directly to a limited number of investors, usually institutional or accredited individuals. This process allows for rapid fundraising without the extensive public disclosure and regulatory hurdles associated with public offerings.Alternative issuance methods include: Public Issue: Securities offered for sale to the general investing public via stock exchanges. Rights Issue: New shares distributed to existing shareholders based on their current ownership stake. Offer to Employees: Shares made available exclusively to company employees.Therefore, the correct selection is (C) Private Placement.
