Securities that are being sold under a prospectus may include securities that are part of different types of offerings. The different types of offerings include initial public offerings, subsequent primary offerings, and registered secondary offerings.

Initial Public Offering (IPO) / New Issue

An initial public offering is the first time that a company has sold its stock to the public. The issuing company receives the proceeds from the sale minus the underwriter’s compensation.

Subsequent Primary / Additional Issues

In a subsequent primary offering, the corporation is already publicly owned and the company is selling additional shares to raise new financing.

Primary Offering vs. Secondary Offering

In a primary offering, the issuing company receives the proceeds from the sale minus the underwriter’s compensation. In a secondary offering, a group of selling shareholders receives the proceeds from the sale minus the underwriter’s compensation. A combined offering has elements of both the primary offering and the secondary offering. Part of the proceeds goes to the company and part of the proceeds go to a group of selling shareholders.

Need Help Passing The Series 57 Exam?



Awarding The Issue

Related Articles
  1. Investing

    What is the Secondary Market?

    The secondary market is where investors purchase securities or assets from other investors, rather than from the issuing companies themselves.
  2. Investing

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  3. Investing

    AMC Prices Secondary at $31.50, Shares Fall

    AMC Entertainment priced at secondary offering at 31.50
  4. Investing

    The Road To Creating An IPO

    Through an Initial Public Offering, or IPO, a company raises capital by issuing shares of stock, or equity in a public market. Generally, this refers to when a company issues stock for the first ...
  5. Insurance

    Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  6. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  7. Investing

    Explaining Rights Offering

    A rights offering is an offer by a company to its existing shareholders of the right to buy additional shares in proportion to the number they already own.
  8. Financial Advisor

    The Issuance Procedure of Corporate High-yield Bonds

    Issuing debt over equity can have several advantages for companies. Here we have a detailed look on the issuance procedure of corporate high-yield bonds.
  9. Investing

    Shake Shack Files Another Secondary Offering

    Shake Shack (NYSE: SHAK) has filed for a secondary offering which will allow some early shareholders to cash out a portion of their holdings. The company submitted paperwork to the SEC which ...
Frequently Asked Questions
  1. What are the Differences Between Affiliate, Associate and Subsidiary Companies?

    All three of these terms refer to the degree of ownership that a parent company holds in another company. Read on to find ...
  2. What Does it Mean if the Correlation Coefficient is Positive, Negative, or Zero?

    Learn what the correlation coefficient between two variables is and what positive, negative and zero correlation coefficients ...
  3. What's the Difference Between a Market Economy and a Command Economy?

    Set by supply and demand, a market economy operates through a price system; in a command economy, governments control the ...
  4. What Factors Cause Shifts in Aggregate Demand?

    Find out how aggregate demand is calculated in macroeconomic models. See what kinds of factors can cause the aggregate demand ...
Trading Center