Post on 07-Apr-2018
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8/6/2019 Financial Mgnt( Shares and Bonds)
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SHARE CAPITALSHARE CAPITAL
Share capital means the capital raised by a company by the issue of
shares.
KINDS OF SHARE CAPITAL
(a). Equity share capital- with voting rights
- with differential rights
(b). Preference share capital
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DEBENTURESDEBENTURES
The most usual form of borrowing by a company is by the issue
of debentures.
Debentures is a kind of loan taken by the company, who issues
a document with the seal to the investor, and pay them a fixed
rate of interest.
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KINDS OF DEBENTURESKINDS OF DEBENTURES
From the Point of view of RegistrationFrom the Point of view of Registration
Registered Debentures Bearer Debentures
Registered Debenture: These debentures which are payable to the registered
holders. The registered holder of the debentures can transfer them like shares,
but the transfer to be complete has to be registered with the company.
Bearer Debentures: These debentures also known as unregistered debentures
are payable to its bearer
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From the Point of view of SecurityFrom the Point of view of Security
Unsecured Debentures Secured Debentures
Unsecured Debentures: Debentures which do not create any charge on the
asset of the company are known as unsecured or naked debentures.
However, a floating charge may be created on these debentures by default.
Normally, these kinds of debentures are not issued.
Secured Debentures: Debentures which create some charge on the propertyof the company are known as secured debentures. The charge may be fixed
or floating
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From the Point of view of TenureFrom the Point of view of Tenure
Redeemable Debentures Irredeemable Debentures
Redeemable Debentures: Debenture are usually issued on the condition that
they shall be redeemed after a certain period. Such debentures are known as
redeemable debentures. They may be re-issued after redemption in accordance
with the provisions of Sec. 121.
Irredeemable or Perpetual Debentures: A debenture will be treated as
irredeemable where either there is no period fixed for repayment of the
principal amount or repayment of it is made conditional on the happening of an
event which may no happen for an indefinite period or may happen only in
certain specified contingent events.
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From the Point of view of ConvertibilityFrom the Point of view of Convertibility
Convertible Debentures Non-convertible Debentures
Convertible Debentures: These debentures give an option to the holders to
convert them into preference or equity shares at stated rates of exchange, after
certain period. The convertible debenture may be fully convertible(FCD) or
partly convertible(PCD).
Non-convertible Debentures: These debentures do not give any option to their
holders to covert them into preference or equity shares. They are to be duly
paid as and when they are mature.
Fully Convertible(FCD) Partly Convertible(PCD)
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