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Capital Structure

  • Date Submitted: 03/02/2012 02:33 AM
  • Flesch-Kincaid Score: 48 
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SHARE CAPITAL
Share Capital is the fund raised by a company through the issuance of common or preferential shares to individuals / institutional investors for the growth and expansion related aspects of the company. It is also known as Equity Financing through which the shareholders of the issued capital receive rights of ownership in the concerned company by buying shares of the same.
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
Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so
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 amount.
Convertible preference shares
A preference...

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