Corporations exist in different forms such as chartered corporations, statutory corporations, and companies. Key features of corporations include separate legal existence, limited liability for shareholders, transferable ownership rights, perpetual existence, and professional management. Share capital represents the money initially invested in a company and any subsequent capital investments, divided into shares. Shareholders appoint company directors and receive dividends, while preference shareholders have certain privileges over equity shareholders. There are various types of share capital including equity shares, preference shares which give preference in dividend payments and asset distribution, and different classes of preference shares such as cumulative vs. non-cumulative and redeemable vs. non-redeemable.
Corporations exist in different forms such as chartered corporations, statutory corporations, and companies. Key features of corporations include separate legal existence, limited liability for shareholders, transferable ownership rights, perpetual existence, and professional management. Share capital represents the money initially invested in a company and any subsequent capital investments, divided into shares. Shareholders appoint company directors and receive dividends, while preference shareholders have certain privileges over equity shareholders. There are various types of share capital including equity shares, preference shares which give preference in dividend payments and asset distribution, and different classes of preference shares such as cumulative vs. non-cumulative and redeemable vs. non-redeemable.
Corporations exist in different forms such as chartered corporations, statutory corporations, and companies. Key features of corporations include separate legal existence, limited liability for shareholders, transferable ownership rights, perpetual existence, and professional management. Share capital represents the money initially invested in a company and any subsequent capital investments, divided into shares. Shareholders appoint company directors and receive dividends, while preference shareholders have certain privileges over equity shareholders. There are various types of share capital including equity shares, preference shares which give preference in dividend payments and asset distribution, and different classes of preference shares such as cumulative vs. non-cumulative and redeemable vs. non-redeemable.
ways: Chartered Corporation Statutory Corporation Company KEY FEATURES Separate legal existence Limited liability of shareholders Free transferability of ownership rights Perpetual existence Common seal Professional Management Government regulation Share capital represents the initial as well as later issues of capital by a company It is divided into number of units ,called shares of stock or simply, SHARES
.Each share has distinctive number.
Ownership is evidenced by a share certificate which indicates kind and number of shares and also their distinctive serial numbers
Also called residual equity as equity shareholders can be paid only after all other claims have been paid.
Being real owners ,these shareholders appoints companys directors and declare dividends
PREFERENCE SHAREHOLDERS enjoy certain privileges over equity shareholders ISSUED- number of shares issued by a company.
SUBSCRIBED- number of shares taken up by the public.
PAID-UP amount of share capital that has been received by the company. PAR VALUE STOCK specifies an amount that must be recorded as share capital, any amount received in excess of par value is SECURITIES PREMIUM or SHARE PREMIUM, which is part of shareholder's equity.
When a company issues shares for cash, it credits the par value to share capital and the rest of the proceeds to securities premium.
When a company issues no par stock. It credits the entire proceeds from The issue to the share capital account.
A company m ay issue share capital in exchange of non cash assets such as land,building,and plant or for services.
It should record the exchange at the fair value of the assets or services received if their fair value can be estimated reliably .
If not, the assets or services should be recorded by reference to the fair value of the shares issued.
It refers to equity shares issued by a company to its directors or employees for providing intangible assets such as know-how.
They can also be issued at a discount Pre-emptive right of existing shareholders to subscribe to the new shares once the Company makes additional issue of share capital. Generally, the price of rights is lower than the current market price of the shares.
Existing shareholder may- Take up all the shares offered Take up less than the number of shares offered Renounce the rights in favour of another person Ignore the rights offered
The procedure for recording proceeds from rights issued is the same as that for the First issue of share capital. Share capital is received in instalments in order to match the cash receipts with their requirements and To minimize the pressure on the investors to find cash.
The terms of the offer specify the part of the issue price payable with the share Application and require the balance to be paid on allotment and on calls for further payment
Application money is refunded for rejected applications
When a shareholder is unable to pay the amounts due on allotment of any of the calls then the board of directors can take back the shares and retain the amount paid on shares and the shareholder forfeits the shares.
The company debit the total amount due on allotment or calls on the forfeited shares to share capita land credits share allotment Or share calls .
The amount already paid goes to shares forfeited. CLASSES OF SHARE CAPITAL Equity share Capital Preference Share Capital Preference shareholders enjoy preference over equity shareholders in two aspects. Payment of public dividends Distribution of assets on liquidation of the company. PREFERENCE SHARE CAPITAL Cumulative and Non-cumulative preference shares Participating and non-participating preference shares Redeemable and non-redeemable preference shares Convertible and non-convertible preference shares