What is the purpose of a share issuance?

The purpose of a share issuance is fundamentally to raise capital for the corporation. When a company issues shares, it is essentially offering ownership stakes in the company to investors. This influx of capital can be utilized for various purposes, such as funding new projects, expanding operations, investing in research and development, or improving infrastructure.

Issuing shares represents a way for a company to gather resources without incurring debt, as opposed to borrowing funds from creditors. This capital-raising mechanism is crucial for a corporation's growth and sustainability, allowing it to pursue opportunities that might otherwise be beyond financial reach.

Other options, while related to corporate operations, do not capture the primary intent of share issuance. Reducing corporate debt typically involves paying off existing obligations rather than generating new capital. Dissolving a corporation would mean ceasing operations entirely, contrary to the goal of raising funds for growth. Increasing employee ownership may be a byproduct of share issuance, particularly in employee stock ownership plans, but it is not the primary objective of issuing shares. Therefore, the correct response highlights capital formation as the essential role of share issuance in corporate finance.