21.6.15

ISSUE OF SHARES, TYPES AND WAYS OF ISSUING

                        ISSUE OF SHARES

What is shares? Shares can be defined as a unit of ownership or capital in a limited liability company. It's the division of the company's ownership into various parts.





                   TYPES / CLASSES OF SHARES

1. Ordinary shares:  These are shares contributed by ordinary share holders or existing members of an organizations.  They are entitled to the totality of the profit after all other shareholders have been settled.
2. Preference share: They are shares that have preference over over other shares. The have a fixed rate of dividend and receive dividend before other shareholders.
3. Redeemable preference shares: These are shares contributed, but the are subjet to payback.
4. Irredeemable preference shares:  These are shares that are not subject to payback.



                            TYPES OF ISSUE

1. Public offer:  This occurs in a situation where shares are issued to the public, in which everyone has the right to demand / apply for it. It's normally advertised.
2. Private placement: This occurs when shares are issued to a specific set of people without giving the right to the public.
3. Bonus / script / free issue: This is where the shares are issued freely to the existing members in which the money used to buy the shares is the undistributed profit of the organization known as retained earnings.
4. Conversion security: This is when debentures holders are converted to shareholders. They earn dividend now instead of interest.
5: Right issue:  This occurs when share is issued at a price above the norminal value but below the market price.



        WAYS OF ISSUING SHARES

1. Shares issued at par: This is when a share is issued at the nominal value, shares are issued at the actual price.
2. Shares issued at premium This occurs when the shares are issued at a price above the norminal value. The difference is called premium, and it will be regarded as capital reserve and posted to share primium account
3. Shares issued at discount: This occurs when the shares are issued at a price below the norminal value. This means that shares are quoted below the actual price and it must be stipulated by the provisions of company's act.


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