Distinguish Between Initial Public Offer (IPO) and Further Public Offer (FPO) | 12th HSC S.P. Chapter 3
The distinction between Initial Public Offer (IPO) and Further Public Offer (FPO) is a newly introduced and highly important question from Maharashtra State Board (MSBSHSE) 12th Standard HSC Secretarial Practice (S.P.) Chapter 3: Issue of Shares. In the HSC Board Examination, this question frequently appears under Question 4 (Distinguish Between) carrying 4 Marks. Below is the complete, textbook-accurate tabular solution strictly aligned with the latest Balbharati Textbook and official board marking scheme.
Board Exam Marking Scheme Tip: Each Distinguish Between question in Q.4 carries 4 Marks (1 mark per valid point). Always present your answer in a neat 3-column table including the Basis of Distinction. Write at least 5 to 6 clear points (starting with Meaning, Type of Issuer Company, When Issued, and Order of Issue) to guarantee a full 4 out of 4 score!
Distinguish Between: Initial Public Offer (IPO) and Further Public Offer (FPO)
| Sr. No. | Basis of Distinction | Initial Public Offer (IPO) | Further Public Offer (FPO) |
|---|---|---|---|
| 1. | Meaning | Initial Public Offer (IPO) refers to an offer of shares of a company to the public for the very first time. | Further Public Offer (FPO) refers to any offer of shares made to the public by a listed company subsequent to (after) its IPO. |
| 2. | Type of Issuer Company | It is issued by an unlisted public company (either a newly formed public company or an existing company going public for the first time). | It is always issued by an existing listed public company whose shares are already traded on a stock exchange. |
| 3. | When Issued | It is issued when an existing unlisted company is in need of fresh capital from the public and decides to list its shares for the first time. | It is issued by a listed company when it requires additional capital for expansion, diversification, or paying off debts after its initial issue. |
| 4. | Order of Issue | IPO always precedes (comes before) an FPO. It can be made only once in the lifetime of a company. | FPO always succeeds (follows after) an IPO. A company can make an FPO multiple times as per its financial requirements. |
| 5. | Listing Status | Before an IPO, the company is not listed on any stock exchange. For an IPO, the company has to get its shares listed on the stock exchange for the first time. | Before an FPO, the company is already listed on a recognized stock exchange; only the newly issued shares are added to the listing. |
| 6. | Risk for Investors | Investment in an IPO is comparatively riskier because the company is going public for the first time and investors cannot easily predict its future market performance. | Investment in an FPO is less risky because the company is already listed, and investors can easily evaluate its past track record and current market price. |
| 7. | Purpose of Issue | The primary objective of an IPO is to raise initial public capital and gain listing status on the stock market. | The primary objective of an FPO is to raise subsequent equity capital to fund new projects, business expansion, or debt reduction. |
Quick Memory Trick to Remember All Points in the Exam
Memory Shortcut (Mnemonic — "MT-WOL-RP"):
Remember these 6 easiest points from the Balbharati textbook to write in under 4 minutes:
1. Meaning (Offered to Public for First Time vs. Offered to Public After IPO)
2. Type of Issuer (Issued by Unlisted Public Company vs. Issued by Listed Public Company)
3. When Issued (Going Public for the First Time vs. Raising Additional Capital Later)
4. Order of Issue (Precedes FPO / Done Only Once vs. Succeeds IPO / Can Be Done Multiple Times)
5. Listing Status (Gets Listed for the First Time vs. Already Listed on Stock Exchange)
6. Risk (More Risky for Investors vs. Less Risky as Track Record is Known)
Key Concept Summary for Objective Questions (Q.1)
- Alternative Name for FPO: A Further Public Offer (FPO) is also known as a "Follow-on Public Offer".
- First-Time Public Issue: Any public company offering its shares to the public for the first time must do so through an Initial Public Offer (IPO).
- Prospectus Requirement: In both IPO and FPO, the company invites the public to subscribe for its shares by issuing a formal document called a Prospectus.