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SHARE CAPITAL

ANJU BABU MGT1005252 BATCH 2

MEANS OF FINANCE
Having established the total cost of project, promoters should work out the means of finance which will enable timely implementation of the project. Finance will ' be available from several sources and it is for the promoters to select the most suitable sources after taking into account all the relevant factors.

To meet the cost of the project the following means of finance are available: Share capital Debt capital Term loan Deferred payment

SHARE CAPITAL
Share capital or issued capital refers to the portion of a company's equity that has been obtained by trading stock to a shareholder for cash or an equivalent item of capital value. For example, a company can set aside share capital, to exchange for computer servers instead of directly purchasing the servers from existing equity.

Share capital usually comprises the nominal values of all shares issued, less those repurchased by the company It includes both common stock (ordinary shares) and preferred stock (preference shares). If the market value of shares is greater than the their nominal value (value at par), the shares are said to be at a premium (called share premium, additional paidin capital or paid-in capital in excess of par).

Share Capital consists of two broad categories of capital namely equity and preference. Equity shares have a fixed par value and can be issued at par or at a premium on the par value. Shares cannot normally be issued at a discount. Preference shares carry a fixed rate of dividend (which can be cumulative). These shares carry a preferential right to be paid on winding up of the company. Preference shares can be made convertible into equity shares. Issue of preference is not a popular form of capital issue.

TYPES OF SHARE CAPITAL


Authorized Share Capital is also referred to, at times, as registered capital. This is the total of the share capital which a limited company is allowed (authorized) to issue to its shareholders. It presents the upper boundary for the actually issued share capital (hence also 'nominal capital'). Issued Share Capital is the total of the share capital issued to shareholders. This may be less than the authorized capital.

Subscribed Capital is the portion of the issued capital, which has been subscribed by all the investors including the public. This may be less than the issued share capital as there may be capital for which no applications have been received yet ('unsubscribed capital'). Called up Share Capital is the total amount of issued capital for which the shareholders are required to pay. This may be less than the subscribed capital as the company may ask shareholders to pay by installments.

Paid up Share Capital is the amount of share capital paid by the shareholders. This may be less than the called up capital as payments may be in arrears ('calls-in-arrears').

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