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MANISHA SINGH PRESENTED BYMAJID ALI PRERIT SABHARWAL PINAK PANI CHOUDHURY SAMEER CHOUDHARY
WHAT IS A SHARE
A unit of ownership that represents an equal proportion of a company's capital. It entitles its holder (the shareholder) to an equal claim on the company's profits and an equal obligation for the company's debts and losses.
CLASSIFICATION OF SHARES
Ordinary
EQUITY SHARES
Represents ownership of the company Source of permanent capital Exercise voting right : appointment of Directors Decision making body Entitled for surplus (profits) or responsible for losses entitled for dividend which is not fixed Variable income securities riskier from investors view point
PREFERENCE SHARES
Preference regarding payment of Dividend & Preference regarding Repayment A preference share gets constant dividend, plus repayment after agreed period No voting Right
DISADVANTAGES OF PREFERENCE
SHARES
DEFFERED SHARES
Deferred Shares Deferred shares are a form of stock that is sometimes issued to key people within the issuing company. Usually, executives or directors of the company are eligible to receive deferred shares.
DIVIDEND
Dividends are payments made by a company to its shareholders. Typically, when a company is making a profit, it distributes those profits to its owners (the shareholders) by way of a dividend.
The purchase by a company of its own shares for cancellation. When a company has a large surplus of cash, but it does not have any plans for large capital expenditure or acquisition of other enterprises. So it wants to return the unwanted cash to the shareholders. It reduces a companys number of shares and paid up share capital.
BONUS SHARES
Capitalization of Reserves Issue of shares out of Free reserves & share Premium Shareholders proportional ownership remains unchanged Book value per share, EPS, Mkt. price per share decreases, while no. of shares increase Bonus issue not on partly paid up shares Bonus issue cannot be in lieu of dividend payment.
SHARE CAPITAL
Share Capital refers to the portion of a company's equity that has been obtained by issuing stock and selling it to a shareholder. The amount of share capital increases each time a corporation sells new shares to the public in exchange for cash or other considerations
Maximum amount of capital which a company can raise from its shareholders
Paid up share capital:Amount of subsribed share capital which is actually paid up by the shareholders. Formulae: total paid up share capital = issue price of ordinary shares * no. of ordinary shares
UNDERWRITING OF SHARES
Generally banks, financial institutions, brokers, etc. guarantee to buy the shares if the issue is not fully subscribed by the public. The company has to pay a commission for their services. Private placements:It involves sale of shares by the company to few selected investors particularly the institutional investors like UTI, LIC, IDBI, ICICI etc.
It involves selling of ordinary shares to the existing shareholders. It is pre-emptive right of the ordinary shareholders.
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Calculated byprofit after tax No.of equity shares