Direct public offering
From Wikipedia, the free encyclopedia
A company pursues a direct public offering (DPO) to raise capital by marketing its shares directly to its own customers, employees, suppliers, distributors and friends in the community. DPOs are an alternative to underwritten public offerings by securities broker-dealer firms where a company's shares are sold to the broker's customers and prospects.
Direct public offerings are considerably less expensive than traditional underwritten offerings. Additionally, they don't have the restrictions that are usually associated with bank and venture capital financing. On the other hand, a DPO will typically raise much less than a traditional offering.
Securities, Legal, Disclosure and Filing Compliances
Like an initial public offering (IPO), corporations seeking a DPO must be in full compliance with the local securities branch of government. With that said, a DPO for all intents and purposes a publicly traded company with a symbol and is registered as a publicly traded company. Individuals and corporations may purchase and sell it's stock accordingly. Companies seeking a DPO must provided :
a) a prospectus to its prospective and existing shareholders
b) publicly available financial reports
c) accurate and up to date stock information available to the public
d) audited financial statements to be in compliance with b)
The corporation may sell securities once completing a DPO by direct methods; telemarketing or mailouts but may also develop a brokering system to assist in the day to day management of such securities.
