when a firm issues securities through a direct public offering dpo it raises money independently without the restrictions associated with bank and venture capital financing the terms of the offering are solely up to the issuer who guides and tailors the process according to the company s best interests the issuer sets the offering price the minimum investment per investor the limit on the number of securities that any one investor can buy the settlement date and the offering period within which investors can purchase the securities and after which the offering will be closed 
on dec 22 2020 the u s securities and exchange commission announced that it will allow companies to raise capital through direct listings paving the way for circumvention of the traditional initial public offering ipo process in a direct listing a company floats its shares on an exchange without hiring investment banks to underwrite the transaction as an initial public offering in addition to saving on fees companies that follow the direct listing process may avoid the usual ipo restrictions including lockup periods that prevent insiders from selling their shares for a defined period of time 2in some cases where there are a large number of shares to be issued or time is of the essence the issuing company may employ the services of a commission broker to sell a portion of the shares to the broker s clients or prospects on a best efforts basis issuing companies can raise capital from the public without the stringent security measures and costs required by the sec since most of them qualify for key federal securities exemptions 3timeline of a dpothe amount of time necessary to prepare a dpo is variable it can take a few days or a few months during the preparation stage the company initiates an offering memorandum which describes the issuer and the type of security that will be sold 4 securities that can be sold through a dpo include common shares preferred shares reits and debt securities and more than one type of investment can be offered through the dpo 56 the company also decides which medium will be used to market the securities potential options include newspaper and magazine ads social media platforms public meetings with prospective shareholders and telemarketing campaigns among others before finally offering its securities to the public the issuing company has to prepare and file compliance documents to the securities regulators under the blue sky laws of each state where it intends on conducting a dpo 7 these documents would normally include the offering memorandum articles of incorporation and up to date financial statements that show the health of the company receiving regulatory approval on a dpo application could take three weeks or several months depending on the state 4most dpos do not require the issuers to register with the securities exchange commission sec because they qualify for certain federal securities exemptions for example the intrastate exemption or rule 147 excludes registration with the sec as long as the company is incorporated in the state where it is offering securities and only selling the securities to residents of that state 8