Вы находитесь на странице: 1из 10

CORPORATION

Corporations come into existence in different


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