QUOTE(panasonic88 @ Aug 20 2009, 11:51 AM)
like dat, they are making a loss, bukan?
Those 'boss' or shareholders before IPO is not buying the shares (like IPO at xx cents), they owned it in the first place when company set up time.
Like I set up a company with paid up capital of Rm1 million, then I have 1 million share, then company make profit and with enable to enlarge the share to 10 million. So now I list the company with 10 million shares while 3 million being offered to public IPO at Rm1.50, so I now own 7 million, but my original cost is 1 million only, so essential my original cost is Rm0.10. So I still can dump it at below IPO price, still making ton of profit.
So, listed status can 'balloon' your wealth instantly.
One major risk/worry for listed company is that: (not point to whom or which or something that did happen or not)
Some irresponsibly company/major shareholders treat listing as share dumping site to get money from it. This issue particularly happen on low cap company like previous second board.
Previously second board company got restricition and profit guarantee needed for about 3 years or so, so they maintain the company in good shape for 3 years, after that company financial turns dramatically into red afterwards, while major shareholders dump their share into market allowable by the listing rule. After nobody care about the company anymore, left it do or die on its own
While on the other hand, they set up a new private company on their own to do the same business or replace what the previous listed company doing one.