SHARE CAPITAL
What is Share capital?
The word "capital" means the specific amount of money with which the business of a company is commenced. "Share capital" which means the amount collected upon shares issued.
the memorandum states the amount of capital with which the company desired to be registered and the number of shares into which it is to be divided. Companies limited by guarantee and unlimited companies may or may not have share capital. But companies limited by shares must necessarily have share capital. Share capital can be change by by passing a resolution.
Types of share capital;-
1. Authorized or nominal capital;-
It is the capital with which a company is registered this is the normal value of the share which a company is authorized to issue by its MOA .in the case of a company limited by shares MOA must state the amount of capital with which the company is proposed to be registered and the division of it into share of a fixed amount.
2. Issued capital;-
Company is not obliged to issue whole of its authorized capital at once it may. It may issue the whole or any part of authorized capital and keep balance for future requirement so, issue capital is the part of nominal capital which is offered to the public for subscription in the form of shares.
3. Subscribe capital;-
A part of the issued capital which is subscribe by the public is called subscribe capital.
Definition of share;-
Share means share in the share capital of a company. It is the interest of the shareholder in the company it is the movable property of the shareholder and he has a liberty to transfer his share in the manner prescribed by the article of the company.
Typed of share;-
A company having share shall issue only fully paid shares which may be of different kind and classes provided by its MOA and AOA.
1)Ordinary share;-
Any shares that are not preferred shares and do not have any predetermined dividend amount is called ordinary share. Ordinary share present an equity ownership in a company and entitled the holder to vote in a matters which are put before shareholders in proportion to their respected share. They are also called common stock.
2) Preferred shares;-
Preferred shares are those share which have some preferential rights over the other types of shares. They enjoy some priority over the ordinary shares. Preferred shares must have both the following preferred rights.
i)Preferential right as to the dividend ;-
it must have preferential right to get fix amount of dividend.
.ii) Preferential right as to repayment of capital;-
It must have a preferential right to get capital on winding up of the company before any thing is paid to the ordinary shareholders
3) Cumulative preferred share;-
The cumulative preferred shares are those which are assured of the dividend every year even if there is no profit in a particular year. if in a particulate year there are no profit to pay the dividend unpaid dividend of such preference share is treated as arrear and is carried forward to the subsequent years.
4) Convertible preferred shares;-
Where preferred shares entitle their share holder to convert their proffered share into ordinary shares within a specified period they are known as convertible preferred shares.
