Types of capital

Equity and Debt mean Shares and Loan

Share

Interest of shareholder in company measure in terms of monery

Shareholder

Member of company
Have voting right
Entitled Dividen
On liquidation receive payment

Types of shares
Preference share
Ordinary share
Shares Distunuishig
Voting Right

Preference
None or resticted by
articles of association

Ordinary
Fulll

Dividend Right

Fixed Dividend in periority

Not fixed/ Paid after Pre

Div

Surplus on Liquidation

No surplus

Dividend Rate

Specific rate to calculate

Dividend Distribution

Dividend distribution first

Liquidation

Voting Rights

After repayment of prefer

shared given surplus
No specific dividend rate
Dividend payments last

Repayable at par value

Do not usually carry a

vote

Carries a vote

Class rights
Special rights attached to each class of shares, such as
Dividend rights,
Distribution of capital on a winding up,
voting
The right to appoint or remove a director
-*Variation needs special resolution or written consent of 75% in nominal value
Minority protection
*15% of the nominal value of that class required to apeal in court.
* ask the court to cancel the variation within 21 days
Variation of class rights
special resolution shall be pass by at least three quarters of the votes

Preference shares
Rights
*fixed rate of dividend
*preferential claim to any company profits available
*cannot force a company to pay dividend
Adv
*greater security of income
*greater security of capital

Treasury shares

*created when a limited company purchases its own sharesout of cash

or distributable profit
*company can re-issue them without the usual formalities
* sold for cash

Issuing shares
Allotment of shares
is the issue and allocation to a person of a certain number of shares under a
contract
of allotment
*private company cannot allot shares in public
*P.C Directors can allot shares
*shares cannot be allotted until at least onequarter of their nominal value and the w
hole of any premium have been paid.
Issue at discount
S593
*Noncash consideration: independently valued/ valuation
*Paying for shares private companies
must be in the six months prior to the allotment.
*premium to be credited to a share premium account, which may

sed for:
writing of the expenses of the issue of new shares
writing of any commission paid on the issue of new shares
issuing bonus shares

only be u

Pre-emption rights

are the rights of existing ordinary shareholders to be

offered new shares issued by the company pro rata to their existing holding of that
class of shares

*Pre-emption right is also called as subscription right.

Paying for shares

public companies

Authorized capital
*It is the maximum amount of capital which a company can raise through shares

* also called Registered capital or Nominal capital.

Subscribed capital:
* amount of capital (out of authorized capital) for which company has received applications from the general publ

Issued capital:
*amount of capitals (out of subscribed capital) that is issued by the company to the subscribers

Nominal value
* It is that price which is defied the share certificate and also specified in the memorandum of association.

Exchange valu
* when shares are allotted to shareholders, they may be allotted at different prices at different time

Transfer price/value
* sometimes shares of private companies transferred from one person (actual owner) to another person at the price which they mutually
agree. This price is known as transfer price.

allotment of shares is simply the creation of shares and issue of shares is then transferring shares to
subscriber

Pri.C. Allotment
*Before allotment an application must be send to the director of a company and then shares allotted and issued to the potential shareholder

Pub.C.Allotment