Share and debenture PPT
- 2. Introduction - Every company want money to expand their business and company can raise money by issuing either debt or equity, Debt is risky so most companies prefer to dilute their equity to raise money. Most Companies go for IPO and if they have already gone for IPO then they go for FPO. The only thing they do in either IPO or FPO is to sell the shares or debentures to investors Whether they issue shares or debentures totally depends upon the concerned company.
- 3. Initial Public Offering - • An initial public offering, or IPO, is the first sale of stock by a company to the public. It the process of offering shares of a private corporation to the public in a new stock issuance. • Process IPO : Hiring Of An Underwriter Or Investment Bank Registration For IPO Verification by SEBI Pricing of IPO Allotment of Shares
- 4. Follow on Public Offer - FPO (Follow on Public Offer) is a process by which a company, which is already listed on an exchange, issues new shares to the investors. FPO is used by companies to diversify their equity base. A company uses FPO after it has gone through the process of an IPO and decides to make more of its shares available to the public or to raise capital to expand or pay off debt.
- 5. Follow on Public Offer - Authorization, registration nominal capital Issued capital Subscribed capital Called up Capital Paid up Capital Reserve Capital
- 6. Shares - One of the equal parts into which a company's capital is divided, entitling the holder to a proportion of the profits. It is divided into a 'number of indivisible units of a fixed amount.
- 7. Types Shares - • Equity Shares – The holders of these shares are the real owners of the company. They have a voting right in the meetings of holders of the company. They have a control over the working of the company. Equity share holders are paid dividend after paying it to the preference shareholders • Preference Shares – Preference shares, more commonly referred to as preferred stock, are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued. If the company enters bankruptcy, the shareholders with preferred stock are entitled to be paid from company assets first.
- 8. Types Equity Shares - • Rights Share: These are the shares issued to the existing shareholders of a company. Such kind of shares is issued to protect the ownership rights of the investors. • Bonus share: These are the type of shares given by the company to its shareholders as a dividend. • Sweat Equity Share: These shares are issued to exceptional employees or directors of the company for their exceptional job in terms of providing know-how or intellectual property rights to the company.
- 9. TYPES OF PREFERENCE SHARES - DIVIDEND • Cumulative Preference Share • Non Cumulative Preference Shares PARTICIPATION IN PROFITS • Participatin g Preference share • Non participatin g Preference shares REDEMPTION • Redeemabl e Preference share • Non Redeemabl e Preference Share • Convertabl ePreferenc e share • Non Convertibl e Preference Share CONVERTABILITY
- 10. ADVANTAGES AND DISADVANTAGES OF EQUITY SHARES - Advantages – High return Easily transferable Easily liquidate Right to vote Right to choose a board of director Disadvantages – High risk In worst cases less privilege given to equity share holder
- 11. ADVANTAGES AND DISADVANTAGE OF PREFERENCE SHARES - Advantages – Dividend at a fixed rate or a fixed amount on preferred shares before any dividend on equity share. Return of preference share capital before the return of equity share capital at the time of winding up of the company. It’s a hybrid instrument having some of the characteristics of debenture and equity share. Right to choose a board of director Disadvantages – They do not provide the investor with any of the voting rights. If the company gets huge profits then they wont get any extra bonus.
- 12. DIFFERENCE BETWEEN EQUITY AND PREFERENCE SHARES -
- 13. ISSUING SHARES - • Issuing Prospectus • Application of Shares Allotment of Shares Call on Shares AT PAR AT PREMIMUM AT DISCOUNT AT PAR AT PREMIMUM AT DISCOUNT
- 14. DEBENTURE - A debenture is a medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. A debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital .
- 15. TYPES OF DEBENTURE -
- 16. ADVANTAGES AND DISADVANTAGES OF DEBENTURE - Advantages – Fixed source of income. Safe investment Definite maturity period Disadvantages – No voting rights Creditors not the owners
- 17. DIFFERENCE BETWEEN SHARES AND DEBENTURES -
- 18. THANKS