Eli5: When companies go public and sell x amount of shares, how can they sell more later and dilute shareholders? Does the company still own a piece of itself to sell later?

Question

Eli5: When companies go public and sell x amount of shares, how can they sell more later and dilute shareholders? Does the company still own a piece of itself to sell later?

In: Economics

Answer 1

Listed companies will normally raise new capital (and issue new shares) via a rights issue. This will raise money from existing shareholders and they will not be diluted, e.g. a 1 for 10 issue where you are entitled to 1 new share for every 10 shares you hold.  

There are other mechanisms like private placements, new investors coming on board etc, but rights issues achieve both raising capital whilst not diluting existing investors (generally).