How Shares Are Issued
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The following information relates to how shares are issued on the London Stock exchange (LSE). Prior to a business being able to launch shares on the LSE, a business needs to attain Public Limited Status (Plc), details of Plc status can be found in the UK Specific Data section.

We shall now briefly discuss five ways shares can be issued onto the LSE:

  • INTRODUCTION: This involves the acquisition of a listing, with permission from the LSE for shares to be traded on the stock exchange. The stock exchange requires there be at least 100 shareholders, with 25% of shares to be held by the general public on the normal market, with only 10% in the Unlisted Securities Market (USM) required to be publicly held. 

  • PLACING: The LSE lets companies raise up to 15 million in the main market and 5 million in the USM. The new capital is generated by an issuing house, usually a merchant bank to its clients. The public still has to hold 25% and 10% depending on which market. 

  • AN OFFER FOR SALE: This involves the disposal of all or existing shares on the LSE. There is limit to the size of capital which can be raised.

  • AN OFFER BY SUBSCRIPTION (Prospectus Issue): This involves the company itself offering shares to the public. The issue may or may not be underwritten by an underwriter. The company may or may not engage in the services of a stockbroker for advice and/or organise the insurance of the share issue.

  • AN OFFER FOR SALE BY TENDER: The tender offer involves an offer to the general public to bid for shares with a minimum subscription quantity/price. After the closing date, the organisers will set a closing quantity/price which benefits the company the most. 

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