Investment through Primary Market

Definition: Investment through primary market refers to the process of buying shares directly from the issuer company through a public offer.
Key Steps:
- Submitting the necessary application form to apply for shares.
- The issuer company follows certain rules and regulations for issuance of securities.
- Shares are allotted as per the prescribed rules and regulations.
- Allotted shares are credited to the applicant's Demat Account maintained with a Depository Participant (DP).
Important Terms:
- Demat Account: A type of account that holds securities in electronic form.
- Depository Participant (DP): An intermediary who provides services to investors to hold their securities in demat form.
Listing and Trading:
- On closure of the public issue, shares are listed on recognized Stock Exchanges within six working days.
- Further trading of the shares takes place on these stock exchanges.
SEBI Guidelines:
- As per the latest guidelines, investors can opt to hold securities in physical form or demat form.
- However, with effect from April 01, 2019, securities can be transferred only if they are held in demat form.
- It is advisable to open a demat account and hold all securities in demat form, except in cases of transmission to legal heirs by way of inheritance or succession.