Preferred shares are an important way of corporate financing, and they are more preferred by some investors because they have higher preference and a certain fixed income than common stocks. So, how do companies issue preferred shares? Here are some basic steps and considerations.
1.Determine the specific amount of financing your business needs and for what purpose. As a means of financing, preferred shares need to be matched with the company's financial planning and strategy, so before issuance, the company should consider and plan in detail the use of the financing funds to ensure that the financing decision is accurate.
2.Develop a distribution plan and documentation. Enterprises need to formulate a detailed preferred share issuance plan and related documents, including equity institutions, subscription conditions, subscription methods, dividend methods, exit mechanisms, etc.
3.Seek issuers and custodians. When a company issues preferred shares to the public, it needs to find a partner or company that can promote and coordinate the issuance on behalf of its own business. Typically, such institutions and custodians need to have a certain level of experience and strength to ensure that the issuance and management of preferred shares is reliable and standardized.
4.Post a recruitment announcement. Before starting to issue preferred shares, enterprises need to issue recruitment announcements to attract more investors to pay attention to and subscribe for the preferred shares of the enterprise. The recruitment announcement includes the basic information of the company, the first issuance note, investor rights, underwriter information and other content.
5.Make a subscription. The subscription period starts from the date of the prospectus announcement, usually within a certain period of time, and all investors who are interested in subscribing for preferred shares are required to submit subscription applications in accordance with the prescribed subscription conditions and methods.
6.**Subscription and placing. After the end of the subscription period, the remaining preferred shares will be distributed to the subscribers according to the subscription plan and completed through ** subscription and placing.
In summary, the issuance of preferred shares requires a series of detailed planning and schemes to ensure the success and matching of the offering. Before issuing preferred shares, companies need to fully evaluate their financing purpose and required amount, and develop effective planning plans and procedures. At the same time, businesses should consider working with professional custodians and partner institutions to ensure that the issuance process and management comply with the law.