Share Capital
SHARE CAPITAL
Share capital is the Funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time because each time a business sells new shares to the public in exchange for cash, the amount of share capital will increase. Share capital can be composed of both common and preferred shares. Each share carrying a vote in the management of the business, managerial control may be limited.
The authorized capital of a company is the maximum amount of share capital that the company is authorized by its constitutional documents to issue to shareholders.
Issued Capital is the value of the shares issued to shareholders. This means the nominal value of the shares rather than their actual worth. The amount of issued capital cannot exceed the mount of the authorized capital.
Types of Share Capital:-
Redeemable Shares
Ownership shares that the issuing business may repurchase. Some redeemable shares are mandatorily redeemable and must be repurchased by the issuer on a particular date or on the occurrence of a specified event, such as the death of an owner.
Preference Shares
Preference shares differ from ordinary shares in giving the holder preferential rights to receive a share of annual profits. An ordinary dividend cannot be paid unless all preference dividends due have been paid in full. Preference shares are also higher in the creditor hierarchy than ordinary shares, and have a preferential right to receive the proceeds of disposal of the assets in the event of a company going into liquidation. They are therefore less risky than ordinary shares, even though they are legally share capital as well.
There are three further types of preference shares:-
Participating preference shares
Preference shares which, in addition to paying a specified dividend, entitle preference shareholders to participate in receiving an additional dividend if ordinary shareholders are paid a dividend above a stated
Share capital is the Funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time because each time a business sells new shares to the public in exchange for cash, the amount of share capital will increase. Share capital can be composed of both common and preferred shares. Each share carrying a vote in the management of the business, managerial control may be limited.
The authorized capital of a company is the maximum amount of share capital that the company is authorized by its constitutional documents to issue to shareholders.
Issued Capital is the value of the shares issued to shareholders. This means the nominal value of the shares rather than their actual worth. The amount of issued capital cannot exceed the mount of the authorized capital.
Types of Share Capital:-
Redeemable Shares
Ownership shares that the issuing business may repurchase. Some redeemable shares are mandatorily redeemable and must be repurchased by the issuer on a particular date or on the occurrence of a specified event, such as the death of an owner.
Preference Shares
Preference shares differ from ordinary shares in giving the holder preferential rights to receive a share of annual profits. An ordinary dividend cannot be paid unless all preference dividends due have been paid in full. Preference shares are also higher in the creditor hierarchy than ordinary shares, and have a preferential right to receive the proceeds of disposal of the assets in the event of a company going into liquidation. They are therefore less risky than ordinary shares, even though they are legally share capital as well.
There are three further types of preference shares:-
Participating preference shares
Preference shares which, in addition to paying a specified dividend, entitle preference shareholders to participate in receiving an additional dividend if ordinary shareholders are paid a dividend above a stated