Reviewed by Aug 27, 2020| Updated on
The word "unsubscribed" refers to securities that are newly issued and have not seen many subscriptions or interest from investors or have not been offered by brokerages prior to the issue date.
If you want to own the newly issued shares, you would only be able to buy them through the secondary markets as you would with any other stock. In other words, shares that are not bought or subscribed from an Initial Public Offering (IPO) before the announcement of the IPO are called unsubscribed.
An investment bank usually supports the IPO of a company. The investment bank is trying to determine the quality of the bid, which will result in an optimum number of subscriptions. Too high an offering price is likely to cause the shares to be unsubscribed, and the size of the unsubscribed IPO component may affect the prices of all the shares.
Understanding Unsubscribed Securities
An issuing company may not be able to raise its target capital if a portion of an IPO is unsubscribed.
Essentially, you can interpret a public offering subscription as an order to purchase your brokerage firm's stock once it is published. If you are not subscribing to a particular public issue through the public offering, you will not buy any shares.
Unsubscribed shares mean a number of new OCD common stock shares equal to the number of rights offering shares that are not properly subscribed to in accordance with the rights offering at or before the subscription expiration time purchased by the investor in cash as per the equity commitment agreement at a purchase value per share equal to the subscription price.