Stock market is the name given to the idea that ‘a company can be owned by one person’ – as opposed to the idea that ‘a company can be owned by millions of people’. When the ownership of a company is limited to one or a few, it is called a private limited company. On the other hand, when the ownership of a company is distributed among millions of people, it becomes a public limited company. Those who own this company are called shareholders. The ownership of this public limited company is divided into smaller parts and each smaller part is called a share. Shares can also be bought and sold, which is called a transaction. In a market strategy, the share price sometimes increases or decreases. Thus, the market for trading shares owned by public limited companies is called stock market or capital market. The capital market is activated through ownership partnership or purchase and sale of shares.
Steps to Stock Market Launch
When a company wants to enter the stock market, they have to follow some rules. When a private limited company wants to open up its ownership in the stock market or to establish their private limited company as a public limited company, they have to adopt certain methods to enter the capital market. The most important of these methods is the initial public offering or IPO. The company’s shares are usually bought by an intermediary broker through an IPO. These are accessible to the market through stock exchanges. Later retail shares are sold at the individual level. This is called primary share. Thus, a company enters the stock market through an IPO and becomes a public limited company. So, IPO marketing is a very important step for a public limited company.
Advantages of IPO
Being a public limited company multiplies the investment and capital of the company. With this extra capital they can make large investments in many other fields including research, infrastructure, marketing. When a company changes from a private limited company to a public limited company, its image brightens, the market for the company’s products grows and its acceptance to the public increases. Public investment increases the flow of financial liquidity to companies and allows companies to work faster with better management and manpower. Since public limited companies are more acceptable, it is easier for them to issue bonds or get bank loans. In a word, a company grows many times over by becoming a public limited company. As the company improves, so does the company’s shareholders, who own the company.
How a Startup Gets Boom with IPO
It is a big milestone for a company to go from a private limited company to a public limited company. When your small startup starts to grow slowly and becomes a limited company by increasing its profits and capital, its ultimate achievement is to express itself as a public limited company. In today’s free market economy, it is very important for big companies to be established as public limited companies. Otherwise, it is difficult and risky to find investors to make large investments. Almost all of the brands and companies we hear about all over the world are public limited companies. Toyota, Walmart, Bank of China: Bank of US, Total Engine Oil, Alibaba Group, Amazon, Nestle Food, HSBC Holdings, Intel, Walt Disney, British American Tobacco, Coca-Cola, Sony are the companies we use their products every day. All these companies are public limited companies and there is no alternative. Public limited companies operate their markets through stock exchanges. As the stock market grows, it contributes to the economic development of the country.
IPO in Bangladesh
In the case of Bangladesh, through the Dhaka Stock Exchange and the Chittagong Stock Exchange, the private limited companies launch their IPOs and become public limited companies. This increases investment in companies. Companies create a lot of jobs and increase government revenue overall. Just as the government benefits from an IPO, the public benefits from owning the company.
Investment is a prerequisite for development. And IPO is the most important method of investment. Investment in developing countries like Bangladesh is very important. Investors also benefit as IPOs create investment opportunities. In Bangladesh, ACI, Bata, Beximco Pharmaceuticals, British American Tobacco, BSRM Steel, City bank, Grameen Phone, IDLC Finance, Jamuna Oil, Square Pharma, Titas Gas Transmission, Walton are trending public limited. These companies contribute to the revenue and the economy of Bangladesh and the overall development of the country. eGeneration is the latest one on this list as to represent the ICT industry of Bangladesh.
Generally speaking, the larger the size of a country’s economy, the larger its stock market. The increase in the number of public limited companies for the development of Bangladesh and society is healthy and good news for the country’s economy. The number of these companies will increase only when private limited companies open their IPOs to the public through stock exchanges. This will increase transactions, increase the size of the economy, increase economic activity and increase public participation in the ownership of companies.
The importance of public limited companies and stock exchanges in the twenty-first century developing countries is immense and versatile. With this in mind, the size of Dhaka Stock Exchange and Chittagong Stock Exchange is increasing and the opportunities for public participation are increasing. For the Fourth Industrial Revolution, there is no alternative to IPOs and increasing the size of the stock market.