Issuance is the issue of money or securities?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:42

The term "emission" comes from the French word émission, which means "release". Indeed, emission is a procedure performed by an issuer for issuing securities and banknotes into circulation.

There are two types of money supply: non-cash and cash. The increase in the volume of money supply is carried out by the state represented by the Central Bank. It issues a certain amount of banknotes in cash at a time. Money emission is carried out according to certain principles.

The banknotes issued are not backed by gold.
On the territory of Russia, the ruble is the only legal means by which payments are made.
Issue, organization of circulation, withdrawal of the money supply is carried out only by the Bank of Russia.
The decision to issue, circulate and withdraw money in Russia is made exclusively by the Councildirectors of the Bank of Russia.
Old banknotes can be exchanged for new ones without limiting the amount. Such an exchange of money cannot last less than 1 year or more than 5 years.

Cashless emission is the creation of deposits and credit lines by banks. This type of issue of money supply can be de alt with not only by the Central Bank, but also by commercial banks. They can increase their lending if their deposit accounts and reserves keep growing. This process of creating non-cash money is called credit multiplication. In terms of its volume, non-cash emission significantly exceeds the issue of cash banknotes.

Abroad issuance is the process of issuing money supply by central banks and the treasury. Banks create non-cash money - banknotes. Treasuries are busy issuing change coins and treasury notes.

Issuers can place their emissive securities (all shares, one-time bonds, financial bills) on stock markets. Emission is a complex and expensive process. Therefore, the reasons for the increase in the number of these documents must be very significant. The main purposes of the issue can be:

Securities are created during the formation of a joint-stock company to create an authorized capital.
Increasing the authorized capital of OJSC, attracting borrowed or non-borrowed investors.
Reorganization of an open joint stock company or its creation from severallegal entities.
Split or consolidate already placed securities.

Decisions on the issue are made by the issuer based on the analysis of the stock market. The attractiveness of investment is assessed. The cost of the event is calculated, whether this issue is profitable. Determination of the volume of issued securities, form, face value and their number are necessary for these calculations.

After the decision is made, the issuing company registers papers with state bodies at the place of business. The organization presents copies of constituent documents, an application for registration of the established form, a decision on the issue. Registration authorities, as necessary, may require prospectuses, an executive decision to issue valuable documents.

Placement of equity papers starts 2 weeks after the announcement of their issue and lasts no more than a year. Information about the value of a block of shares or bonds is disclosed on the day of the start of their circulation. The results of sales of emissive securities are published in the media. A month after the completion of the procedure, a report on the results of the event is submitted to the registration authority.