Primary Shares

Primary shares are new shares issued by a company during an initial public offering (IPO) or subsequent equity offering.These shares are sold directly to investors in the primary market, with the proceeds going to the company to fund expansion, pay down debt, or for other corporate purposes. Unlike secondary shares, which are existing shares sold by shareholders, primary shares represent new equity and often lead to an increase in the total number of shares outstanding.

Example

A company issues 10 million primary shares during its IPO to raise capital for expanding its production facilities, increasing the total number of shares available in the market.