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BREAK UP OF SHARES
AUTHORIZED = ISSUED AND INISSUED
ISSUED = SUBSCRIBED UNSUBSCRIBED
ISSUED = CALLED AND UNCALLED
CALLED = PAID UP AND UNPAID UP
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Shares Issuance Reduction Increase Types and Dividend
7 hrs · Edited ·
PREMIUM ACCOUNT
APPLICATION OF SHARE PREMIUM ACCOUNT
RUB DUP
REDEMPTION OF PREFERENCE SHARES
UNDERWRITING COMMISSION
BONUS SHARES
DISCOUNT ON SHARES
UNISSUED CAPITAL
PRELIMINARY EXPENSES
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Shares Issuance Reduction Increase Types and Dividend
January 26 at 10:12am · Edited ·
Q.. IF PREFERENCE SHARES ARE 300,000 AND EQUITY SHARES ARE 900,000. WHAT IS THE CAPITAL?
ANS. 1,200,000
Q.. REFERENCE SHARES ARE 200,000 AND EQUITY SHARES ARE 400,000. THE TOTAL CAPITAL IS 600,000. IF WE PAY DIRECTLY
PREFERENCE SHARES HOLDERS WITHOUT CREATING CAPITAL RESERVE THEN WHAT HAPPENS?
ANS. CAPITAL WILL BE REDUCED WHICH IS NOT ALLOWED AS CREDITORS CREATE PROBLEMS.
Q..IS CAPITAL RESERVE EQUAL TO CAPITAL?
ANS. YES. IN FUTURE BONUS ARE ISSUED FROM FROM IT.
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 11:01pm ·
Q.. Laws says once Preference Shares are issued the capital is assumed to be increased so we cant write them off by paying to preference shares
holder. We pay them and create Capital Reserve.
Q.. What is the use of Capital Reserve?
Ans. In Future we issue right Shares from it.
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 10:58pm · Edited ·
Q.. Why create Capital Reserve just pay Preference Shares?
Ans. No. If we pay Preference shares then the capital of the company is reduced.
Q.. Preference Share becomes the part of the Capital?
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Ans. Yes.
Q.. But Preference Shares Holder are not Owner?
Ans. Yes.
Q. Why Preference Share capital is called capital,.It must be liability?
Ans. Yes. It is is liability
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 8:01pm ·
IF PREFERENCE SHARES ARE 200,000 BUT PAYMENT IS MADE TO THEM 300,000. HOW THIS 100,000 ADDITIONAL WILL BE MADE?
ANS.
RETAINED EARNING 200,000 DEBIT
CAPITAL RESERVE 200,000 CREDIT
SHARE PREMIUM 100,000 DEBIT
PREFERENCE SHARE 200,000 DEBIT
BANK 300,000 CREDIT
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:59pm ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
RETAINED EARNING IS NEGATIVE
SUPPOSE PREFERENCE SHARES ARE ISSUED FOR 15 YEARS. THEY ARE PAID IN 5TH YEAR. WILL CAPITAL OF THE COMPANY REDUCE TO
400,000 INSTEAD OF 600,000?
ANS. CRR CAN NOT BE CREATED AS RETAINED EARNING IS IN LOSS.
WE ISSUE FRESH RIGHT SHARES
BANK DEBIT 200,000
SHARES CAPITAL 200,000
PREFERENCE SHARES ARE DEBIT 200,000
BANK IS CREDIT 200,000
CAPITAL IS 400,000 + 200,000 = 600,000
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:57pm ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
RETAINED EARNING IS 300,000
SUPPOSE PREFERENCE SHARES ARE ISSUED FOR 15 YEARS. THEY ARE PAID IN 5TH YEAR. WILL CAPITAL OF THE COMPANY REDUCE TO
400,000 INSTEAD OF 600,000?
ANS. CRR (CAPITAL RESERVE) IS CREATED WHICH IS EQUAL TO CAPITAL.
DEBIT RETAINED EARNING 200,000
CREDIT CAPITAL RESERVE 200,000
DEBIT PREFERENCE SHARE CAPITAL 200,000
CREDIT BANK 200,000
NOW CAPITAL IS EQUITY SHARES 400,000 + CAPITAL RESERVE 200,000. REMAINS 600,000
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:53pm ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
PROFIT IS 300,000
HOW LONG THE LIFE LIFE OF EQUITY SHARE AND PREFERENCE SHARES?
ANS. EQUITY SHARES TILL THE COMPANY EXISTENCE
PREFERENCE SHARES FOR 20 YEARS MAXIMUM
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:51pm · Edited ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
PROFIT IS 300,000
WHAT IS THE TOTAL CAPITAL OF THE COMPANY?
(A) 400,000
(B) 200,000
(C) 600,000
ANSWER --C
PLEASE TELL PREFERENCE SHARE HOLDERS TAKE INTEREST?
ANS. No. SHARE IN PROFIT SO THEY TAKE DIVIDEND.
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:50pm ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
PROFIT IS 300,000
PLEASE TELL EQUITY SHARES TAKE INTEREST ON SHARE IN PROFIT?
ANS. SHARE IN PROFIT SO THEY TAKE DIVIDEND.
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 7:49pm ·
Q.. EQUITY SHARES ARE 400,000
PREFERENCE SHARES ARE 200,000
PROFIT IS 300,000
PLEASE TEL WHO IS FIRST ENTITLED ON DIVIDEND?
ANS. PREFERENCE SHARES HOLDERS THEN EQUITY SHARES HOLDERS
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 5:06pm ·
Explain the provisions relating to redemption of preference shares as contained in the Companies Ordinance, 1984. (05 marks)
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 5:05pm ·
QUESTION 4 Khan Pipes Limited had obtained a credit facility of Rs. 500 million in 2005 which is payable in five years. In order to improve its debt
equity ratio, the directors have requested the bank to accept Khan Pipes Limited’s shares of Rs. 75 million, against the saidc redit. Comment on the
legality of the above transaction from the company’s point of view, under the Companies Ordinance,1984. (06)
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 5:05pm ·
QUESTION 3 Golf Limited is in the process of offering right shares to the existing shareholders. They have been informed by their Corporate Advisor
that offer of right shares shall be accompanied by a circular. You are required to explain the company about the requirements of the circular which
will be annexed with the offer. (07)
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 5:04pm ·
QUESTION 2 (B) Identify what other modes of redemption of preference shares are available to Silver Limited. (04 marks)
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Shares Issuance Reduction Increase Types and Dividend
January 25 at 5:04pm ·
QUESTION 2 The Directors of Silver Limited, a listed company, plan to redeem 10% preference shares of the company. In view of the provisions of
the Companies Ordinance, 1984 you are required to: Explain the conditions that Silver Limited needs to comply with, if it intends to redeem
preference shares out of the proceeds of afresh issue of shares. (02 marks)
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January 25 at 8:09am ·
Khush Bakth Shujat MNA, Media Personality, and Educationalist appprasing Syed Ali Abbas Abidi
https://www.youtube.com/watch?v=WKOFGCDtlxM
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Interview with Madam Khusbakht Shujaat at KASBITInterview with Madam Khusbakht Shujaat at KASBIT
YOUTUBE.COM | BY THEKASBIT
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January 23 at 2:54pm ·
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HIGHLIGHTS
Shares Issuance Reduction
Increase Types and Dividend
January 22 at 12:13pm · Edited ·
Q..How many shares can be issued against loan?
Ans: 20% shares, if loan term is more than 3 years.
Q..Who are effected by issuing shares against loan to Financial Institution?
Ans. Members, as it dilutes their holding
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Shares Issuance Reduction Increase Types and Dividend
January 22 at 12:12pm ·
Q6. Jahangir Limited a public listed company have incurred losses during the past two years, as a result of which, 17% of their equity has been wiped
out. The Board of directors want to issue share worth Rs.100 million, being 25% of the present share capital at a discount of 20%. You are required
to advise them on the matter which the SECP may consider before granting approval for issue of shares?
Ans. The company should have passed at least one year after its commencement of business. It should have passed special resolution and rate of
discount should not be more than prescribe rate.
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Shares Issuance Reduction Increase Types and Dividend
January 22 at 12:08pm · Edited ·
Q: How does a company raise its capital for the first time?
Ans: A public company has two choices to raise its capital:
a. By issuing prospectus or
b. By SILOP submission
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Shares Issuance Reduction Increase Types and Dividend
January 22 at 12:06pm ·
Q2) Is irregular allotment possible in a private company ?
Ans : No ! The cases of irregular allotment arises only in public companies
Case One : Subscription received but the directors failed to file SILOP to ROC
Case Two : Subscription received but the Prospectus had not been approved by ROC
Case Three : Prospectus approved by ROC, Subscription was not fully received but the directors issued Shares
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