Basic terms of business and commerce

41. Which are the PSUs that have been privatised recently ? 

THERE ARE MANY : VSNL – SOLD TO TATA CMC - SOLD TO TATA IPCL – SOLD TO RELIANCE MODERN BREAD – SOLD TO HUL – WHICH ALSO SOLD IT OUT
  

42. What is QIP? 

Qualified institutional placement : here a company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to
  

43. Who are qualified institutional buyers ? 

They have expertise and the financial analytical skills to evaluate and invest in the capital markets Public financial instituions Pension funds Provident funds mutual funds venture capital funds FIIs other such bodies as approved by SEBI (DIP) guidelines
  

44. What is ADR? 

ownership in the shares of a non-U.S. company that trades in U.S. financial markets. An owner of an ADR has the right to obtain the foreign stock it represents, but US investors usually find it more convenient simply to own the ADR. The price of an ADR often tracks the price of the foreign stock in its home market,
  

45. What is GDR? 

If you want your shares to be traded in London stock exchange and Luxumberg stock exchange, you can issue GDR. GDR represent shares of non-european company. GDRs are traded on the International Order Book (IOB). Normally 1 GDR = 10 Shares, but not always.
  

46. What is green shoe option? 

It allow underwriters to sell up to 15% more shares than the original number set by the issuer, if demand is more..
  

47. What is red herring prospectus? 

Now most companies fix share prices through bidding process (when the go for IPO). Prospectus require that they have to disclose price in advance. So companies go for red herring prospectus. There is no price or issue size stated in the red herring, and it is sometimes updated several times before being called the final prospectus. It also contains a passage in red that states the company is not attempting to sell its shares before the registration is approved by the SEBI.
  

48. What is gum jumping ? 

If companies invite investors to subscribe their share even before their prospectus is approved by SEBI it is called gum jumping. It is illegal. Trading securities on the basis of information that has not yet been disclosed to the public is illegal. It is done before IPO, insider trading is generally for shares which are already issued.
  

49. What is IPO Locking? 

It is a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. Once the lock-up period ends, most trading restrictions are removed.
  

50. What is underwriting? 

Underwriting means an agreement with or without conditions to subscribe to the securities of a body corporate when public (for IPO) OR the existing shareholders (for rights issue) of such body corporate or the public (for rights issue or FPO) do not subscribe to the securities offered to them.