Initial public offering (IPO) may be defined as the sale of stocks to several and unknown investors through a call and announcement.
The method of public offering of company stocks may vary subject to different conditions.
There are two markets for trading stocks on the ISE namely, the Stock Market (SM) and the Emerging Companies Market (ECM).
Companies, which will be traded on the SM, may choose to offer part of the stocks representing the existing capital through sale of existing shares or to increase capital, restricting the pre-emptive rights of existing shareholders, or apply both methods concurrently.
The shares eligible for trading on the ECM include those issued by joint stock companies in capital increases by partially or fully restricting the preemptive rights of the existing shareholders, and in the case of secondary offerings, the shares acquired by using the rights attached to such shares. The shares of the existing shareholders that are not included in the ECM Directory may not be traded on the primary or secondary market of the ECM. Yet, there are no restrictions on the purchase of the shares by the existing shareholders from the ECM primary or secondary market and sales thereof afterwards. This rule aims to channel the funds raised by issuing shares on the ECM to the company and directly contribute to the financial structure of the company.