Home » Eng Accounting » F » Flotation


Traditionally and officially, the establishment of a public company and the raising of the necessary capital for it either by an open offer to the public or by offer for sale or by a placing. Modern usage has slightly altered this meaning. particularly when the company obtains its capital after and not at the same time as its formation – a practice now common. The term is now more often applied to the proess of floating off capital, either by a new company or a private company which is ‘going pubhc’, through the medium of a merchant bank or some other intermediary which will offer the shares to ^ the public in the manner it considers most appropriate. The law concerning the need for a prospectus will, of course, always apply.

Reference: The Penguin Business Dictionary, 3rd edt.