Companies raise money either through debt (debentures) or equity (shares). Most companies prefer to dilute their equity by issuing shares rather than taking on risky debt. They do this through an Initial Public Offering (IPO) for initial listing or a Follow On Public Offering (FPO) after being listed. Whether a company issues shares or debentures depends on its needs and preferences. Shares represent ownership and voting rights, while debentures are a type of loan that pays a fixed rate of interest but does not hold ownership.

1. SHARES AND
DEBENTURE

2. Introduction -
Every company want money to expand their business and company can raise money by issuing either debt
or equity,
Debt is risky so most companies prefer to dilute their equity to raise money.
Most Companies go for IPO and if they have already gone for IPO then they go for FPO. The only thing they
do in either IPO or FPO is to sell the shares or debentures to investors Whether they issue shares or
debentures totally depends upon the concerned company.

3. Initial Public Offering -
• An initial public offering, or IPO, is the first sale of stock by a company to the public. It the process of
offering shares of a private corporation to the public in a new stock issuance.
• Process IPO :
Hiring Of An
Underwriter Or
Investment Bank
Registration
For IPO
Verification
by SEBI
Pricing of
IPO
Allotment of
Shares

4. Follow on Public Offer -
FPO (Follow on Public Offer) is a process by which
a company, which is already listed on an exchange,
issues new shares to the investors. FPO is used by
companies to diversify their equity base.
A company uses FPO after it has gone through the
process of an IPO and decides to make more of its
shares available to the public or to raise capital to
expand or pay off debt.

5. Follow on Public Offer -
Authorization, registration
nominal capital
Issued capital
Subscribed capital
Called up Capital
Paid up Capital
Reserve Capital

6. Shares -
One of the equal parts into which a company's capital is
divided, entitling the holder to a proportion of the profits.
It is divided into a 'number of indivisible units of a fixed
amount.

7. Types Shares -
• Equity Shares –
The holders of these shares are the real owners of the company. They have a voting right in the
meetings of holders of the company.
They have a control over the working of the company. Equity share holders are paid dividend
after paying it to the preference shareholders
• Preference Shares –
Preference shares, more commonly referred to as preferred stock, are shares of a company's stock
with dividends that are paid out to shareholders before common stock dividends are issued. If
the company enters bankruptcy, the shareholders with preferred stock are entitled to be paid
from company assets first.

8. Types Equity Shares -
• Rights Share:
These are the shares issued to the existing shareholders of a company. Such kind of shares is
issued to protect the ownership rights of the investors.
• Bonus share:
These are the type of shares given by the company to its shareholders as a dividend.
• Sweat Equity Share:
These shares are issued to exceptional employees or directors of the company for their exceptional
job in terms of providing know-how or intellectual property rights to the company.

9. TYPES OF PREFERENCE SHARES -
DIVIDEND
• Cumulative
Preference
Share
• Non
Cumulative
Preference
Shares
PARTICIPATION
IN
PROFITS
• Participatin
g
Preference
share
• Non
participatin
g
Preference
shares
REDEMPTION
• Redeemabl
e
Preference
share
• Non
Redeemabl
e
Preference
Share
• Convertabl
ePreferenc
e share
• Non
Convertibl
e
Preference
Share
CONVERTABILITY

10. ADVANTAGES AND DISADVANTAGES
OF EQUITY SHARES -
Advantages –
High return
Easily transferable
Easily liquidate
Right to vote
Right to choose a board of director
Disadvantages –
High risk
In worst cases less privilege given to equity share holder

11. ADVANTAGES AND DISADVANTAGE
OF PREFERENCE SHARES -
Advantages –
Dividend at a fixed rate or a fixed amount on preferred shares before any dividend on equity share.
Return of preference share capital before the return of equity share capital at the time of winding
up of the company.
It’s a hybrid instrument having some of the characteristics of debenture and equity share.
Right to choose a board of director
Disadvantages –
They do not provide the investor with any of the voting rights.
If the company gets huge profits then they wont get any extra bonus.

12. DIFFERENCE BETWEEN EQUITY
AND PREFERENCE SHARES -

13. ISSUING SHARES -
• Issuing Prospectus
• Application of Shares
Allotment of Shares
Call on Shares
AT PAR
AT PREMIMUM
AT DISCOUNT
AT PAR
AT PREMIMUM
AT DISCOUNT

14. DEBENTURE -
A debenture is a medium to long-term debt instrument used by
large companies to borrow money, at a fixed rate of interest. A
debenture is thus like a certificate of loan or a loan bond
evidencing the fact that the company is liable to pay a specified
amount with interest and although the money raised by the
debentures becomes a part of the company's capital structure, it
does not become share capital .

15. TYPES OF DEBENTURE -

16. ADVANTAGES AND DISADVANTAGES
OF DEBENTURE -
Advantages –
Fixed source of income.
Safe investment
Definite maturity period
Disadvantages –
No voting rights
Creditors not the owners

17. DIFFERENCE BETWEEN SHARES
AND DEBENTURES -

18. THANKS