SU 3: Capital/ Corporate finance and Accounting practice
Definition of a
Capital
Capital :
The total funds/resources available to a
company to achieve its
objectives
Ways a company can raise capital :
-
Investment by founding shareholders
Issue/sale of shares >
- share capital
-
-
profits earned from services/products
Reserves/savings kept by
-
the company
loans and debentures
-
* must be used carefully
company capital and
honestly
Share Capital
The MoI (Memorandum of Incorporation) specifies :
·
-classes of shares
Number of shares
-
Rights attached to shares
-
Limitations attached
-
to shares
Authorised Share Capital
The classes and number of shares that is authorised/allowed to issue in order to raise
·
a company money .
How many shares may the company issue ?
Issued Share Capital Authorised = Allowed to issue
The money Issued - actually issued
company has actually raised by issuing / selling shares
·
the .
Shares
Share : interest
personal right representing propriety
·
a a in a
company
A shareholder
may have the right to :
>
-
Receive Dividends when declared
- Receive a share of net assets when the is wound up
company .
>
- Receive information
>
- vote shares
on
company .
, Classes of shares Normal/residual shares in a
company
-
Rights generally include :
c
Ordinary shares
Right to vote
-
Right to Dividends
-
Right to receive part of net assets on winding up
-
.
>
Dividends may be fixed or not
·
Preference shares Crecieve preferential treatment , regarding dividends
Dividends are usually fixed
C Receive dividends before shareholders
ordinary
c receive their preference dividend
&
Participating preference shares <
May also share in the remaining/residual profits
↓ Redeemable preference shares >
- The company can
repurchase/buy back the shares
> The shares can be redeemed by the company according to
their terms
& Shares issued for a specific period or subject to a specific condition
~
Term/Period shares when :
The
period expires or
·
The condition is fulfilled .
>
- shares
may be :
-repurchased by the company o
-
converted into another class of shares
~ cumulative cummulative : missed dividends accumulate
preference shares >
-
~ If the dividends were missed ,
shareholders can receive the unpaid
or missed dividends later ,
if this right is provided for in the
MOI
Definition of a
Capital
Capital :
The total funds/resources available to a
company to achieve its
objectives
Ways a company can raise capital :
-
Investment by founding shareholders
Issue/sale of shares >
- share capital
-
-
profits earned from services/products
Reserves/savings kept by
-
the company
loans and debentures
-
* must be used carefully
company capital and
honestly
Share Capital
The MoI (Memorandum of Incorporation) specifies :
·
-classes of shares
Number of shares
-
Rights attached to shares
-
Limitations attached
-
to shares
Authorised Share Capital
The classes and number of shares that is authorised/allowed to issue in order to raise
·
a company money .
How many shares may the company issue ?
Issued Share Capital Authorised = Allowed to issue
The money Issued - actually issued
company has actually raised by issuing / selling shares
·
the .
Shares
Share : interest
personal right representing propriety
·
a a in a
company
A shareholder
may have the right to :
>
-
Receive Dividends when declared
- Receive a share of net assets when the is wound up
company .
>
- Receive information
>
- vote shares
on
company .
, Classes of shares Normal/residual shares in a
company
-
Rights generally include :
c
Ordinary shares
Right to vote
-
Right to Dividends
-
Right to receive part of net assets on winding up
-
.
>
Dividends may be fixed or not
·
Preference shares Crecieve preferential treatment , regarding dividends
Dividends are usually fixed
C Receive dividends before shareholders
ordinary
c receive their preference dividend
&
Participating preference shares <
May also share in the remaining/residual profits
↓ Redeemable preference shares >
- The company can
repurchase/buy back the shares
> The shares can be redeemed by the company according to
their terms
& Shares issued for a specific period or subject to a specific condition
~
Term/Period shares when :
The
period expires or
·
The condition is fulfilled .
>
- shares
may be :
-repurchased by the company o
-
converted into another class of shares
~ cumulative cummulative : missed dividends accumulate
preference shares >
-
~ If the dividends were missed ,
shareholders can receive the unpaid
or missed dividends later ,
if this right is provided for in the
MOI
