What is the Difference Between Offer for Sale and Offer for Subscription?

The key difference between an offer for sale and an offer for subscription lies in the minimum level of subscriptions required for the shares and the process of issuing new shares. Here are the main distinctions:

• Offer for Sale: In this method, existing shareholders of a company sell some of their shares to the public, usually through a stock exchange. The company does not receive any funds directly from the sale of these shares. There is no restriction on the number of bids a single buyer can make, and the process is less time-consuming with fewer documentation requirements compared to other methods like an IPO.
• Offer for Subscription: This method involves issuing new shares to the public for subscription, usually through a prospectus containing details about the company and the securities being offered. There is a minimum level of total subscriptions for the shares, and if this level is not met by shareholders collectively, the offer can be withdrawn. Investors can subscribe for as many shares as they'd like, subject to the terms of the offer. The offer for subscription can be made at a fixed price or through a tender process.

In summary, an offer for sale involves existing shareholders selling some of their shares to the public, while an offer for subscription involves issuing new shares to the public with a minimum level of subscription requirement.

Comparative Table: Offer for Sale vs Offer for Subscription

Here is a table comparing the differences between an Offer for Sale and an Offer for Subscription:

An Offer for Sale is a method where investors are invited to purchase new shares of a company, while an Offer for Subscription requires a minimum level of subscription for the shares. The offer is withdrawn if this minimum level is not met. Both methods have their own advantages and disadvantages, with Offer for Subscription being a less risky option for investors compared to Offer for Sale.