Share selling by Enterprises
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Share selling by Enterprises
All enterprises own private corporations. Private corporations that become very profitable and reach a market value higher than 600B and have a P/E ratio <40, can perform an IPO and become public. The Enterprise can sell some of the shares in an IPO or the corporation can issue new shares.
The choice of who sells the shares depends on the reason for the IPO. The corporation may want to pay back debt or the enterprise may want to cash some of the value of state corporations. At the IPO, up to 15% of the shares of the corporation may be sold.
Once a corporation becomes public, it will offer more of its shares on the share market at a rate of 2% of the corporation shares per game month.
The CEO may decide to sell more shares and can offer up to 10% of the corporation shares. Once the shares are sold, or partially sold, more shares can be offered but the total offered and unsold shares cannot exceed 10% of the total number of shares in the corporation.
Automatic selling will continue at a rate of 2% per game month as long as the shares are sold and as long as the enterprise has more than 51% of the shares of the corporation. When that level is reached or the shares are not sold, the procedure will stop offering additional shares.
Enterprises also sell shares that are not attractive. When the PE-ratio of shares reaches a high level, expected profits diminish and it makes no sense to hold the shares. Corporations will offer these shares for sale.
In some cases however, when the corporation is producing a product that is in short supply and its price is increasing or the corporation is being upgraded and developed with higher salaries and production and potential profits, buying such shares may be profitable as the corporate profits may increase and its PE-ratio may become more attractive.
Enterprises can also sell shares they bought for a low price and can make a large profit on selling them. Profit taking is an accepted strategy in the market and the proceeds can be used to purchase shares in other, may be more promising corporations.
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