General Public Distribution

Most stocks you buy come from a previous shareholder. If you log into your trading software or call up your broker, the shares you get don't come directly from the company. They come from someone else who held the stock. Like buying socks on eBay vs. buying new ones in the package direct from the factory.

A general public distribution comes into play when you buy shares directly from the company. The cash you spend on the stock goes directly to the firm, rather than to a previous shareholder.

Companies raise money by selling stock all the time. The first time they do it, the process is called an "initial public offering," or IPO. Once on the public market, the company makes secondary offerings whenever they want (if they can talk their shareholders into accepting the dilution). To do this, the company sells additional shares into the market.

However, when these offerings take place, the process usually involves an intermediary. A large Wall Street bank typically underwrites the venture, basically buying the stock themselves and then reselling it to large shareholders. From there, those whales might resell it again on the open market, where you can finally pick up some shares using your trading software or broker.

The general public distribution skips this underwriting step. The shares are made available directly to the public, not sold through an intermediary.