Share subscription refers to the process by which individuals or entities acquire ownership in a corporation or company by purchasing shares or stock directly from the company itself. In other words, it is a formal agreement or contract between the company and the subscriber to issue a certain number of shares at a predetermined price.
During a share subscription, the company makes an offer to potential investors to purchase shares of the company's stock at a specified price. This offer includes terms and conditions related to the number of shares available, the purchase price, and any additional benefits or restrictions associated with the shares. Interested individuals or entities can then accept the offer by subscribing to the specified number of shares and paying the required amount.
The process of share subscription is commonly used during an initial public offering (IPO), when a company decides to go public and offer shares of its stock for the first time to the general public. Subscribing to shares during an IPO allows individuals or institutional investors to become shareholders in the company and potentially benefit from any future increase in the company's value or receive dividends.
Share subscription is a regulated process, usually overseen by financial regulatory authorities or stock exchanges to ensure transparency, fairness, and compliance with relevant laws and regulations. It helps companies to raise capital and expand their operations while allowing investors to participate in the growth of the business.
The etymology of the phrase "share subscription" can be broken down as follows:
1. Share: The word "share" comes from the Old English word "scearu", which means a portion or division. It has roots in the Proto-Germanic word "skeran", meaning to cut or shear. The term "share" has been used since the 14th century to refer to a portion of property or stock held by an individual in a company or corporation.
2. Subscription: The word "subscription" derives from the Latin word "subscriptio", which means a signing from below. This term originally referred to the act of signing a document at the end or beneath the text. Over time, it began to be used more generally to indicate the act of signing up for or paying for a service on a regular basis.