Issue of Shares and Debentures

Dr C K Biswas
Dept ME

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

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. Some
companies may issue shares to investors with the understanding they will be paid
at a later date.
Paid-up Capital- Paid-up capital is the actual amount received from the CalledUp Capital.

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
(e.g, loan interest and preference share dividends).
Ordinary shareholders usually have voting rights.
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Other Means of Funding

A. Debentures
Debentures are long-term loans evidenced by deeds which set out the rate of
interest payable and the date of redemption.
B. Reserves
- Reserves are profits or gains which accrue to ordinary shareholders.
- They are undistributed profits which have been retained within the company.
- There are two types of reserves:
I) Revenue reserves
- They are undistributed trading profits.
- They can be used to pay dividends.
- e.g. the balance on the profit and loss account and general reserve.
II) Capital reserves
- They are gains or profits arising from non-trading or non-operating
activities.
- They are not available for distribution as dividends.
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Distinction between Shares and Debentures

Description

Ordinary Shares

Relationship between the

holders and the company

Preference Shares

Debentures

Members/Shareholders
Member/Shareholders
of the companyof the company
company

Creditors of the

Dividends/Interest
No fixed percentage A fixed rate of dividends A fixed rate of
or amounts of dividends
interest will paid
The dividends will be
whether or not the
subjected to the
company makes a
profitability and
profit
dividends policy of the
company
Priority of Distribution
After the distribution Before to Ordinary
Before any dividend
of the dividends to Shareholders
distributable to
Preference Shareholders
Ordinary and Preference
Shareholders
Treatment in Balance
Sheet

Ordinary Share Capital

Preference Share
Capital
liability if the period of
repayment is longer than
one year &
as a current liability if
repayment < 1 yr.

Treated as a long term

Company Profile
A business or company profile is a marketing document
designed to catch the attention of and inform potential
purchasers about your goods or services. It must be more
than just an advertisement; it must provide a convincing
argument of why a potential purchaser should deal with
your business.
Company profile helps to gather intelligence on
competitors and top performers in your industry is the
key to increased productivity and profitability in a
competitive world.
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Company Profile types of information

1. Company Information section: It contains core company
contact information, an operational and financial overview,
and a listing of key personnel and other details.
2. Company News: In this section contains recent company press
releases and articles from regional and national news sources,
when available.
3. Industry Information: It provides a look at overall industry
structure, current conditions, key players, future developments,
as well as background perspective on the products produced.
4. Key Processes: An introduction to the basic manufacturing
processes used within the industry, including important
technology and equipment. This description is limited to
manufacturing companies or divisions employing one or two
key processes to produce their products.
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Moodle assignment

Step 1 Please read the sample company profile

and
assessment it.

Moodle assignment

Step 1 Please read the sample company profile

and
assessment it.

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Moodle assignment

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Moodle assignment

Step 2 Click on grades where the company

allotted to you will appear as feedback column.

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Moodle assignment

Step 3 Prepare the profile of thecompany allotted

to
you (2 pages).
Step 4 Submit as a pdf file.

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Moodle assignment

Step 5 At later date you will have to assess some

students' submissions also.

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