Public Offering

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Related to Public Offering: Secondary Public Offering

Public Offering

An issue of Securities offered for sale to the public.

A business can raise capital for its enterprise through the sale of securities, which include stocks, bonds, notes, debentures, or other documents that represent a share in the company or a debt owed by the company. When a company proceeds to issue the securities, it is called an offering.

There are two types of offering: private and public. A private offering is made to a limited number of persons who are so well-informed about the affairs of the company that the company does not need to file a registration statement with the state or federal government. In contrast, a public offering is made to the public at large and is governed by federal and state regulations.

Until the 1930s the public offering of securities was subject to minimal regulation. Investors had no reliable way of knowing whether the information they received about a public offering was correct and complete. Because of the lack of regulation, fraudulent public offerings were common, leading to the sale of worthless stock.

The Securities Act of 1933 (15 U.S.C.A. § 77a et seq.), enacted after the Stock Market crash of 1929 and the resulting Great Depression, set in place rules and regulations for public offerings of securities in interstate commerce or through the mails. Before a public offering can be made, a company must file with the Securities and Exchange Commission a registration statement containing financial and other data, including the price at which shares will be offered to the public, commissions paid to those who underwrite the security, and any options to purchase that have been issued.

In addition to requiring the filing of a registration statement, the Securities Act of 1933 makes it unlawful to mail or transmit in interstate commerce any security for the purpose of sale or delivery unless it is preceded or accompanied by a prospectus (a written statement of information about the public offering) that fully discloses all material facts regarding the investment, including the financial status of the enterprise. Material facts are those that are necessary to enable a purchaser to weigh the advantages and disadvantages of the investment. The balance sheet contained in the prospectus must accurately reflect the financial status of the issuing company and should include its assets and liabilities.

Unless a company files a registration statement that is then approved by the commission, it cannot legally make the public offering. Registration of the securities does not imply that the commission has approved the issue or that it has found the registration disclosures to be accurate. It does mean that persons filing false or incomplete information with the commission subject themselves to the risk of fine or imprisonment or both. Additionally, those persons connected with making a false or incomplete registration statement or prospectus may be liable for damages to purchasers of the securities.

Intrastate securities (those not publicly offered in interstate commerce) are governed by the laws of the state in which the stock is traded. State control of intrastate securities traffic does not conflict with federal regulation of interstate transactions. Most states have enacted blue sky laws, which regulate public offerings in a manner similar to federal securities legislation. These state laws get their name from their attempt to stop the sale of stock in fraudulent and speculative enterprises that have nothing to offer but blue sky. Many states require registration of securities before a public offering can be made. If the business seems likely to commit fraudulent acts involving prospective purchasers of its securities, state registration will be denied, and the public offering will not be allowed to go forward.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Safehold Inc (NYSE:SAFE) priced an underwritten public offering of 3,000,000 shares of its common stock for total proceeds of about USD84m gross, it stated on Thursday.
One of the clarifications it raised included 'whether registration of common shares at the Securities and Exchange Commission [SEC] was inadvertently omitted as a mode of public offering.'
This is because the ERC also adopted the modes of public offering in accordance with the 2015 Implementing Rules and Regulations (IRR) of the Securities Regulation Code (SRC).
Biopharmaceutical company Navidea Biopharmaceuticals Inc (NYSE American:NAVB) reported on Tuesday the completion of its public offering of 8,000,000 common stock.
(NASDAQ: RRBI), the holding company for Red River Bank, has said that it has closed its initial public offering of common stock at a public offering price of USD45.00 per share.
The warrants in the underwritten public offering have a term of five years and are exercisable immediately upon issuance.
CNX Midstream Partners LP (NYSE: CNXM), a growth-oriented master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia, has announced the pricing of an upsized underwritten public offering.
Its main objective is to promote ease of doing business and streamline the entire public offering process.
ISLAMBAD -- The Securities and Exchange Commission of Pakistan (SECP) has notified the draft Public Offering of Securities (POS) Rules, 2016, and has also placed the same on its website to obtain public opinion within 30 days.
According to the Istanbul Stock Exchange (IMKB) data, Turkey held only one public offering in 2009 worth of 6 million USD while Korea held 69 public offerings worth of 2.6 billion USD and companies in Poland held 36 public offerings for their shares worth of 2.2 billion USD.
Grubb & Ellis Company announced the closing of a public offering of an aggregate of 10 million shares of the Company's common stock at a public offering price of $9.50 per share.
* A C $50 million-plus public offering is more likely to get the attention of Canada's premier investment bankers and institutional and retail investors, both during and following the offering.