When an issuer publicly offers its securities for the first time, the offering is typically completed pursuant to a prospectus in an initial public offering (IPO). Trading in the previously-issued securities may then occur amongst investors in the secondary market, often through a stock exchange.
As trading in the secondary market does not provide any additional capital to the issuer, when an issuer later requires an injection of capital, it can complete another offering of its securities. In instances where there are sufficient safeguards, these subsequent offerings may be completed without a prospectus, in what is referred to as the exempt market.
(See Exempt market offerings / private placements)