This document summarizes key concepts related to shares and debentures issued by companies to raise capital. It defines shares and share capital, describing the main types of shares as equity and preference shares. It also outlines debentures, their types, and examples of IPOs and FPOs conducted by companies to issue new shares. The summary provides high-level information on the purpose and structure of the document.

1. SHARES&DEBENTUREPREPARED BY:-Ravi AhujaAnuragGelaniSheetalVermaAkankshaGoswamiBhavinRathod1STUDENT OF BHILAI BUSINESS SCHOOL BHILAI CHATTISHGARH

2. IntroductionMeaning of shares & share capitalTypes of share & their advantages & disadvantagesIssue of sharesMeaning of debenture & its typesReal Life IPO & FPO Exampleconclusion2CONTENTS

3. 3INTRODUCTIONCompanies (Private and Public) need capital either to increase their productivity or to increase their market reach or to diversify or to purchase latest modern equipments.Companies go in 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.(the term investor here represents retail investors, financial institutions, government, high net worth individuals, banks etc).Whether they issue shares or debentures totally depends upon the concerned company.

4. 4MEANING OF SHARES& SHARE CAPITALA share is one unit into which the total share capital is divided. Share capital of the company can be explained as a fund or sum with which a company is formed to carry on the business and which is raised by the issue of shares.Shares are the marketable instruments issued by the companies in order to raise the required capital. These are very popular investments which are traded every day in the stock market and the value of the share at the end of the day decides the value of the firm.

5. 5TYPES OF SHARESThe shares which are issued by companies are of two types:• Equity Shares• Preference Shares

6. 6EQUITY SHARESEquity Shares are issued and are traded everyday in the stock market.Equity share holders only get dividend after preference shareholders & debenture holders.The returns on the equity shares are not at all fixed. It depends on the amount of profits made by the company.The board of directors decides on how much of the dividends will be given to equity share holders. Share holders can accept to it or reject the offer during the annual general meeting.Equity shareholders have the right to vote on any resolution placed before the company.

7. 7TYPES OF EQUITY SHARESThe Equity share is a common name, some of the types of equity shares are:• Blue Chip Shares• Income Shares• Growth shares• Cyclical Shares• Defensive shares• Speculative shares

8. 8FURTHER CLASSIFICATIONOne more classification of shares is given by one of the most successful and respected investor all around the world Peter Lynch. According to him the shares can be classified into 6 types:• Slow Growers• Fast Growers• Stalwarts• Cyclical• Turn-around• Asset plays

9. 9ADVANTAGES• High Return• Easily Transferable.• These can be easily liquidated.• Right to vote• Right to choose the board of directors.• Equity share holders have the right to oppose any of the decisions taken by the board of directors.( for e.g. This is what happened when Mr. Ramalingaraju tried to buy Maytas company)DISADVANTAGES• High Risk• In worst cases less privilege given to equity share holders.

10. 10PREFRENCE SHAREThese are other type of shares. The preference shares are market instrument issued by the companies to raise the capital. Preference shares have the characteristics of both equity shares and debentures. Fixed rate of dividends are paid to the preference share holder as in case of debentures, irrespective of the profits earned company is liable to pay interest to preference share holders.

11. 11TYPES OF PREFERENCE SHARESPreference shares are divided into:• Cumulative & Non cumulative shares• Redeemable & Non-redeemable• Convertible & Non-convertible shares• Participating and non-participating

12. 12ADVANTAGES• These yield fixed rate of returns• It’s a hybrid instrument having some of the characteristics of debentures and equity shares.DISADVANTAGES• They do not provide the investor with any of the voting rights.• If the company gets huge profits then they won’t get any extra bonus.

13. 13ISSUE OF SHARES Detail of a Company & Shares in Prospectus.

14. 90 % application is necessary

15. If access application received then company issue shares by pro rata basis

16. full amount can be called up by company at the time of application or it can be paid up in installments also (calls)

17. share of the company may be issued in any of the following three ways:At par;At premium; andAt discount.ProspectusApplicationAllotmentRepayment/ dividend

18. 14CONT…. Issue of shares for consideration other than cash (For example: issue of shares to vendors, to promoters etc.) Forfeiture of shares

19. Buy – Back of Shares

20. Right Shares

21. Redemption of preference shares/ DebentureInstrument of debt executed by the companyA certificate of loanCompany pays pre specified percentage of interestPart of the company's capital structureDebentures are generally secured against the company’s assetsConvertible debentures can be either fully or partly converted into SharesConvertible debentures may carry a lower rate of interest15DEBENTURES

22. 16TYPES OF DEBENTURESSecurity Point of ViewSecured DebenturesUnsecured DebenturesTenure Point of ViewRedeemable DebenturesPerpetual DebenturesMode of Redemption Point of ViewConvertible DebenturesNon-Convertible DebenturesCoupon Rate Point of View17ADVANTAGES1. Control of company is not surrendered to debenture holders because they do not have any voting rights.2. Interest on debenture is an allowable expenditure under income tax act, hence incidence of tax on the company is decreased.3. Debenture can be redeemed when company has surplus funds.DISADVANTAGES1. Cost of raising capital through debentures is high of high stamps duty.2. Common people cannot buy debenture as they are of high denominations.3. They are not meant for companies earning greater than the rate of interest which they are paying on the debentures.

23. IPO EXAMPLEThe Issue comprises a Fresh Issue and an Offer for Sale. The Proceeds of Fresh Issue The activities for which funds are being raised by our Company through this Issue, after deducting the proceeds from the Offer for Sale: (i) to partially finance the Yamuna Expressway Project; and (ii) general corporate purposes. (collectively referred to herein as the "Objects"). In addition, our Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges.18

24. 19FPO EXAMPLENTPC Limited (Company) enter market with FPOFPO opens on February 03' 10India’s largest power generation company NTPC Limited (Company) will enter the capital markets on February 3, 2010 with its further public offer (FPO) of 412,273,220 equity shares of Rs 10 at prices to be determined through an alternative book building process under part D of Schedule XI of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009. The FPO will close on February 5, 2010.

25. 20CONCLUSIONNo doubt equity shares have both advantages and disadvantages but the fact is that equity shares are the most sought financial instruments for both investment or for speculation.

26. 21THANK YOUANY QUESTIONS YOU CONTACT AT anurag.gcool@gmail.com