Issue of shares


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Issue of share

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Issue of shares

  1. 1. Welcome
  2. 2. Introduction A limited liability company is a legal entity and the existence of the limited liability companies The owners of a limited liability company will be named as “members” or “shareholders” of the company Each company is governed by two documents, known as the Memorandum of Association and the Articles of Association
  3. 3. Chart Diagram . Companies Unlimited Companies Limited Companies Authorized Capital Issued Capital Called up Capital Share Capital Preference Share Other Funding Ordinary Share Debenture Reserves Issue of shares and debenture Revenue Reserve Paid Up Capital Price: - at par - at premium - at discount Payment: - Payable in full - by instalments Capital Reserve
  4. 4. Classification of Capital Authorized Capital Authorized Capital is the total number of shares and the total amount of Share Capital which a limited liability company is allowed to issue and it is stated in the Memorandum of Association. Authorized Capital may be changed and increased to cope with the growth of the company by the approvals of the shareholder Issued Capital Issued Capital is the part of the Authorized Capital actually issued to the shareholders. Called-Up Capital Called-Up Capital is the amount of the Issued Capital that the limited liability companies request their shareholders to pay. Paid-up Capital Paid-up capital is the actual amount received from the Called-Up Capital. The amounts of the Called-Up Capital which has not yet been received will be named as “Calls in Arrears”. „‟Calls in Advance”refers to the advance payment of the Un-called Capital from the shareholders.
  5. 5. Types of Share Capital A. Preference Shares Preference shareholders are entitled to fixed % of dividends before any ordinary dividends are paid. No voting rights. I) Cumulative preference shares Any unpaid dividends on cumulative preference shares can be carried forward to a later year. II) Non-cumulative preference shares. The unpaid dividends cannot be carried forward to later years. B. Ordinary Shares The dividends of ordinary shares are not fixed. They depend on the return of the company. Ordinary shareholders are paid only after all other claims have been met. Ordinary shareholders usually have voting rights.
  6. 6. Raising of Capital-Issue of shares and debentures Issue Price Issue at Par The issue price is same as the “PAR”, “NOMINAL” or “FACE” value of the shares and debentures. Issue at a Premium The issue price may be HIGHER than the par value of the shares and debentures. The difference between the issue price and the par value of the shares or debentures is named as “SHARE PREMIUM” Issue at a Discount The issue price may be LOWER than the par value of the shares and debentures. The difference between the issue price and the part value of the shares or debentures is named as “SHARE DISCOUNT‟
  7. 7. Methods of Payment Payment in Full Payable by instalments
  8. 8. Payment in full The full amount of the issue price of the shares and debentures should be paid to the company on application whether or not the applicants will allot the shares and debentures.
  9. 9. Payable by instalments The full amount of the issue price of the shares and debentures will be paid to the company by instalmentsin following steps: Step 1 Step 2 applicants Step 3 Step 4 Step 5 Step 6 Receipt of application money Return of application money to unsuccessful Allotment of shares Receipt of allotment money Call on shares Receipt of call money
  10. 10. Conclusion We understand the basic concept of capital formation, how company make(manage) huge capital and also know the various type of the share. We understand the the difference between cash payment & installment payment also difference in capital. For making the capital company issue the share at a certain cost .Shareholder is the owner of the company. They provide the capital to the company for dividend( interest / profit ) . Shareholder have the voting rights and consequently control the total affairs of the company. Company invest that capital into the production activity & make a profit , this profit distribute among the shareholder as a dividend for their investment.
  11. 11. Thank you…