Companies require to issue shares to the public because the promoters' own capital and borrowings from banks and financial institutions may not be sufficient for setting up or running the business over the long term. Therefore, companies invite the public to contribute towards their equity by issuing shares through a Public Issue, which is an offer to the public to subscribe to the share capital of the company.
Source: Chapter 3, Section 3.1 – Issue of Shares
---
The examiner expects two clear points: (1) the limitation — promoters' capital + bank borrowings are insufficient, and (2) the solution — inviting public contribution through a public issue. Use the textbook phrase "contribute towards the equity" for full marks. No need to elaborate on types of issues for a 2-mark question.