Issue, Forfeiture & reissue of Shares - 1 | Ch 11 Unit 2 | CA Foundation Accounts | CA Parag Gupta

CA Parag Gupta 2.0・2 minutes read

Understanding the various types of shares, share capital, and dividend calculations are essential for company shareholders and directors managing company accounts efficiently and effectively. Shares represent different types of ownership and voting rights, while share capital consists of authorized, issued, subscribed, called up, and paid up amounts, impacting the company's financial standing and operations.

Insights

  • Shares in a company are divided into equity and preference shares, with equity shares granting voting rights and preference shares receiving dividends first but lacking voting rights.
  • Share capital of a company comprises authorized, issued, subscribed, called up, and paid-up shares, with each type representing a distinct stage in the capital-raising process and financial structure of the company.

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Recent questions

  • What are the different types of preference shares?

    There are eight types: Cumulative, Non-Cumulative, Participating, Non-Participating, Redeemable, Irredeemable, Convertible, and Non-Convertible.

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Summary

00:00

Types of shares in company accounts

  • Issue, feature, and re-issue of shares are crucial aspects of company accounts.
  • Shares represent small indivisible units of a company's total capital.
  • Equity shares grant voting rights, while preference shares do not and receive dividends first.
  • There are eight types of preference shares: Cumulative, Non-Cumulative, Participating, Non-Participating, Redeemable, Irredeemable, Convertible, and Non-Convertible.
  • Cumulative preference shares allow the collection of unpaid dividends for up to three years.
  • Participating preference shares enable shareholders to receive surplus profits.
  • Redeemable preference shares must be repaid, while Irredeemable shares cannot be repaid.
  • Convertible preference shares can be converted into equity shares.
  • Non-Convertible preference shares cannot be converted.
  • Understanding the distinctions between equity and preference shares is essential for company shareholders.

23:03

Understanding Share Capital and Voting Rights

  • Equity share holders have voting rights in a house, while preference share holders, like cousins, have limited rights.
  • Debenture holders are akin to neighbors who lend money without voting rights.
  • Directors, like Ramu Kaka, manage the company under the owners' orders.
  • Share capital of a company comprises five types: authorized, issued, subscribed, called up, and paid up.
  • Authorized share capital is the maximum capital mentioned in the Memorandum of Association.
  • Issued share capital is the portion offered to the public for purchase.
  • Subscribed share capital is the amount the public actually subscribes to.
  • Called up share capital is the portion of money the company asks shareholders to pay.
  • Uncalled capital is the amount the company has not yet requested from shareholders.
  • Reserve capital is the amount the company will only ask for at winding up, not currently needed.

43:37

Understanding Share Capital and Dividends in Companies

  • The authorization from A, issue from S, subscribe from C, and the paid-up share capital of the company is Rs 5 crore 21 lakh.
  • Paid-up share capital is considered Rs 5 crore 21 lakh if the company did not receive Rs 4 lakh.
  • Five types of share capital: Authorized, Issued, Subscribed, Called up, and Paid.
  • The formula for authorized share capital is issued share capital plus unissued share capital.
  • Called up capital is equal to paid up capital plus calls sans arrears and minus calls in advance.
  • Dividend is paid by the company on paid-up share capital.
  • The company always pays dividends on paid-up share capital.
  • The dividend in the example is calculated at 20% of the paid-up share capital.
  • Over-subscription occurs when the public subscribes for more shares than available.
  • The balance sheet should be prepared according to specific rules, including equity and liabilities, assets, and notes to accounts.

01:07:45

Share Capital Calculation and Rules Explained

  • In 12th grade, discard materials related to that grade.
  • Share Capital Called Up meaning in Hindi is discussed.
  • Calculation of share capital is explained - 60000 shares at Rs 10 each, called up at Rs 9 each.
  • Calculation of call and share arrears is demonstrated.
  • Paid-up share capital is determined to be Rs 5 lakh.
  • The balance sheet total is calculated to be Rs 530,000.
  • Cash and Cash Equivalents are discussed, with Rs 530,000 received.
  • Rules for application money as per the Companies Act and SEBI are explained.
  • Issue price calculation is detailed - face value plus premium.
  • Subscription of shares is elaborated - full subscription, over subscription, under subscription, and SEBI's minimum subscription rule.
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