Archive | Shares

Issue of Shares at a Discount (With Illustration)

When a company issues shares at a price less than their face value, it is said to have issued them at a discount. For example, if a company issues shares of the face value of Rs 100 each at Rs 95 each, it will be said to have issued them at a discount of 5%. […]

Issue of Shares at a Premium (With Illustrations)

When shares are issued at a price higher than the face value (also called par value or nominal value), it is called an issue of shares at a premium. Excess of issue price over face value is the amount of premium; it is a capital profit for the company and the amount so earned has […]

Sweat Equity Shares and Employee’s Stock Option

In this article we will discuss about the Sweat Equity Shares and Employee’s Stock Option in a Joint Stock Company. Sweat Equity Shares: The Companies (Amendment) Act, 1999 introduced through section 79-A a new type of equity shares called ‘Sweat Equity Shares’. The expression ‘sweat equity shares’ means equity shares issued at a discount or […]

Journal Entries on Issue of Shares

In this article we will discuss about the Journal Entries on Issue of Shares for Consideration Other than Cash. A company may issue shares for consideration other than cash. It may, for example, purchase some fixed assets for which it may make payment in the form of shares. Or it may take over a running […]

Issue of Shares by a Company

The following points highlight the five main steps for the issue of shares by a company. The steps are: 1. Issue of Prospectus 2. Use of Application Moneys 3. Pro Rata Allotment 4. Calls in Advance 5. Calls in Arrear 6. Balance Sheet. Step # 1. Issue of Prospectus: To collect capital from the public, […]

Alteration of Share Capital for Reconstruction

In this article we will discuss about the Alteration of Share Capital for Reconstruction. A company can alter its share capital, if it is empowered by its articles to do so. Alteration, as distinct from reduction, may involve the following: (1) Conversion of shares into stock; (2) Increase in capital; (3) Decrease (without reduction in […]

Issue of Bonus Shares

Bonus shares are the shares allotted to existing equity shareholders without any consideration being received from them, in cash or in kind. They are issued to capitalize profits of the company. Bonus shares can be issued only if Articles of Association permit such an issue. SEBI Guidelines Regarding Issue of Bonus Shares: SEBI has issued […]

Forfeiture and Reissue of Shares

In this article we will discuss about the Forfeiture and Reissue of Shares:- 1. Introduction to Forfeiture and Reissue of Shares 2. Journal Entries on Forfeiture (or Surrender) and Reissue of Shares 3. Solved Illustrations. Introduction to Forfeiture and Reissue of Shares: If a shareholder fails to pay allotment money or a call or a […]

Valuation of Shares: Need and Methods (With Illustrations)

In this article we will discuss about the Need and Methods required for Valuation of Shares. Need for Valuation of Shares: In most cases, shares are quoted on the stock exchange; and for ordinary transactions in shares or debentures or Government securities, the price prevailing on the stock exchange may be taken as the proper […]

Difference between Shares and Debentures | Finance Sources

This article will help you to differentiate between Shares and Debentures. Difference # Shares: 1. A share is a part of owned capital. 2. Shareholders are paid dividend on the shares held by them. 3. The rate of dividend depends upon the amount of divisible profits and policy of the Board of Directors. 4. Dividend […]

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