Why can not stocks be purchased direct from companies just like mutual funds can be purchased from fund house?



Earlier, in India, we used to give 2.25% entry load for investing in mutual funds, which was stopped by SEBI for investors going directly to fund house . Why can’t shares also be puchased like this from companies without paying any brokerage to any broker ? Why is it possible only in IPO and not always ?

6 Replies to “Why can not stocks be purchased direct from companies just like mutual funds can be purchased from fund house?”

  1. Because whilst there are dozens of brokerages, there are thousands & thousands & thousands of public companies, and if they ALL had to hire extra people to act as “in-house” brokers to manage their securities, most of them would go out of business!


  2. it is a rule framed to rule out any fraudulent sale purchase shares of that company. it is only to save investors from exploitation.




  3. You can buy stocks directly from companies in Primary Market through Initial Public Offering (IPO) only.

    Once IPO period closed, you can buy only through Secondary Markets i.e., Stock Exchanges.

    All the best,
    trendpower


  4. it is a laborious work first book contract then veify the identity and receipt of money in time then delivery of the scripts to the right owner and maintain records etc etc .
    but in mutual fund the purpose it self is such work where in companies their primary work is to produce market and sale it for profit





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