Layered Premia

Layered Premia An increasingly popular method of structuring a public issue in which different rates of premia are charged from different classes of investors. There is a floor rate, i.e. a minimum premium which to usually payable by members of the company, while a higher premium is payable by members of the public who are subscribing to the issue for the first time. There may again be different premia for promoters and foreign collaborators. The justification for layered premia is not maximization of the company’s gain (although sadly some companies seem to have precisely this in mind) but considerations of fair play and reward. See also AUCTIONING OF AN ISSUE.

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