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633907337412360000
633907337412360000
Definition:According to the Securities Contract Regulation Act 1956, securities include shares, scrip's, stocks, bonds, debentures and other marketable like securities of any incorporated company or other body corporate, or government.
Classification of Securities
Source of Issue
Fixed income securities e.g. bonds, debentures and preference shares Variable income securities e.g. Equities
EQUITY SHARES
The share capital of a company is divided into number of small units of equal value is termed as SHARES
SHARE CERTIFICATE is a certificate under common seal of the company specifying the number of shares held by any member. Various forms of Equity shares
Sweat Equity
Non-voting share
Rights according to section 85 (2) of the Companies Act 1956 :Rights to..
vote at the General body meetings of the company. control the management of the company. share the profits in the firms of dividend & bonus shares. during winding up of the company pre-emption in the issue of new capital. suit if there is any discrepancies in the rights set aside.
Equity share holder of a limited company is liable to the companys debts only to the extend of the share in the paid up capital
Main advantages are
Capital appreciation Limited liability Free tradeabity Tax advantages Hedge against inflation
SWEAT EQUITY
New instrument came in force from 1998 with a newly inserted section 79A of the Companies Act 1956.
Sweat equities can be issued ..
At a discount to employees and directors As a consideration other than cash for contributions
NON-VOTING SHARES
Special Features
No voting rights to the shareholders Carry additional dividends Right to participate in the bonus issue Maximum 25% of voting stock can be issued 20% more dividend Automatic voting rights if dividend not paid for 2 years
RIGHT SHARES
New Shares issued to the existing share holders as a matter of legal rights.
Regulated under the provisions of Companies Act & SEBI
Time period for issue of rights shares. Can be forfeited by the share holders through a special resolution. Renounce in the favor of shareholders nominee. May be partly paid. Minimum subscription limit is prescribed.
BONUS SHARES
Indication of higher future profits. Main aim to capitalize the free reserves
Conditions:
Issued only to existing share holders Fully paid-up shareholders Distributed in addition to cash dividend Issued without any payment of cash
PREFERENCE SHARES
Resembles features of bonds & equity. No voting rights Dividends paid at the discretion of the Board of Directors.
Cumulative preference shares Non- cumulative preference shares Convertible preference shares as quasi-equity shares Redeemable preference shares Irredeemable preference shares
DEBENTURES
According to Companies Act 1956 Debenture includes debenture stock, bonds and any other securities of company, whether constituting a charge on the assets of the company or not.
Characteristics:
Certificate of indebtedness specifying date of redemption & interest rate Fixed rate of interest / coupon rate Redemption (creation of sinking fund) Indenture trust deed between the company & debenture trustee
Types of debentures
Secured or Unsecured (property involvement) Fully convertible carries low interest rate Partly convertible Non-convertible
BONDS
Long term debt instrument ,promises to pay a fixed annual sum as interest for specified period of time
Features:
Types of Bonds
Secured bonds & unsecured bonds Perpetual bonds & redeemable bonds Fixed interest rate bonds & floating interest rate bonds Deep discount bonds issued by IDBI & ICICI Capital indexed bonds Zero coupon bonds traced in U.S security market
E.g.
Present value=Face value of the bond (1+R)n
A bond matures in 20 years time with the face value of Rs.50,000 would be sold for Rs.5185 to give a return of 12 %.
WARRANTS
Is a bearer document of title to buy specified number of equity shares at a specified price.
Share Warrants Issued by Public Ltd. Co. Need for provision in the Articles of Association Should be approved by central government Transfer of share warrants requires no registration Share warrants are issued to fully paid up shares Considered as a negotiable instrument Share certificate Issued by Public & Private Cos. Not required Not needed Transfer completes only if it is registered Same Not considered like that
INVESTMENT INFORMATION
International Affairs
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Company information
Stock market information
Investment Avenues
Financial Securities
Negotiable Securities
Non-negotiable Securities
Antiques
Real assets
Real Estate
Negotiable Securities
Equity Shares
Growth shares Income shares Defensive shares Cyclical shares Speculative shares
Preference shares Debentures Bonds Post-office Savings Certificates Govt. securities (gilt edged) Money market securities
Non-Negotiable Securities
Deposits
Life insurance
Public Provident Fund scheme National savings scheme National savings certificates.
Mutual Fund
1. 2. 3. 4. 5. 6.
Growth schemes Income schemes Balanced schemes Money market schemes Tax savings schemes Index schemes
REAL ESTATE
OTHERS
ARTS
ANTIQUES
Investment Process
Investment policy
Analysis
Valuation
Portfolio construction
Portfolio Evaluation
Market
Industry Company
Diversification
i. Debt& equity diversification
Appraisal
Revision