Methods of Making a Capital Issue

Understanding how companies raise funds is crucial in finance. A Capital Issue is the process by which a company offers its shares or other securities to the public or select investors to raise capital.

Let's examine the methods provided in the options:

• a) Offer for sale: This is a method where shares are not directly offered by the company to the public. Instead, an intermediary (like an issuing house or stockbroker) buys the shares from the company and then offers them to the public. While the public buys from the intermediary, the capital ultimately flows to the company through the initial sale to the intermediary. It's a common method for public issues.
• b) Private placement: This method involves selling shares or securities to a selected group of sophisticated investors or institutions, rather than offering them to the general public. It bypasses the lengthy and costly process of a public issue, making it quicker for raising funds from a limited number of investors.
• c) Rights issue: This is an offer of new shares by a company to its existing shareholders in proportion to their current shareholding. Existing shareholders have the 'right' to subscribe to these new shares, often at a price lower than the market price. If they don't want to buy, they can often renounce their rights in favour of others. This is a way for a company to raise capital from its current owners.
• d) Bid and Offer: These terms relate to the buying (bid) and selling (offer or ask) prices of a security in the market. The bid price is the highest price a buyer is willing to pay, and the offer price is the lowest price a seller is willing to accept. While these are fundamental concepts in securities trading, "Bid and Offer" itself is not a method used by a company to issue new capital. It describes price dynamics in the secondary market or during the book-building phase of a public issue, but not the issuance method itself.

Based on the descriptions:

• Offer for sale (a) is a method of capital issue.
• Private placement (b) is a method of capital issue.
• Rights issue (c) is a method of capital issue.
• Bid and Offer (d) is not a method of capital issue; it describes market pricing.

Therefore, the methods of making a Capital Issue among the given options are Offer for sale, Private placement, and Rights issue.