SAPM INVESMENT Patel Meghna V.

Roll No: 1138

EQUITY SHARES
In the business and finance, a share also referred to as equity share of stock means a share of ownership in a corporation. Share capital of a company is dividend into a small number of units of equal value called share. Share certificate means certificate under the common seal the company specifying the number of shares held by any member. EQUITY SHARES RIGHTS SECTION 85(2)OF THE COMPANIES ACT 1956. To vote at the general body meetings of the company. To control the management of company. To share in the profits in the form of dividends and bonus shares. To claim on residual after repayment of all claims in the case of winding up of the company. Right of pre-emption in the matter of issue of new capital.

 To apply the company law board for calling an extraordinary general meeting.

ADVANTAGES
Capital appreciation Limited liability Free tradability Tax advantages Hedge against inflation

SWEAT EQUITY
Sweat equity shares means equity shares issued by the company to employees or directors at a discount or For consideration other than cash for providing know how or making available rights in the nature of intellectual property rights or value additions by whatever name called

SWEAT EQUITY FOR

Directors/employees who designed strategic alliance. Directors/employees worked for strategic market penetration and helped the company attain sustainable market share.

NON VOTING SHARES

Nonvoting shares no voting rights. They have to participate in the bonus issue. It also can be listed and traded in the stock exchanges. The company can issue this max 25% of the voting stock. The dividend on nonvoting shares is 20%.

RIGHT SHARES
Shares offered to existing shareholders at a price by the company are called right shares. The right shares may be partly paid. In the event of company falling to receive 90% subscription limit is prescribed for right issues.

BONUS SHARES
Bonus share is the distribution of shares in addition to the cash dividend to the existing shareholders. Bonus shares are issued to existing shareholders without any payment of cash. The issue of bonus shares enables the shareholders to sell the shares and get capital gains while retaining their original shares.

PREFERENCE SHARES
Preference shares are a long term source of finance for a company. They are neither completely similar to equity nor equivalent to debt. The law treats them as shares but they have elements of both equity shares and debt.

FEATURS OF PREFERENCE SHARES

Fixed dividends Preference over equity No share in earning Fixed maturity Cumulative dividend

TYPES OF PREFERENCE SHARES

Cumulative and non cumulative preference shares Redeemable and irredeemable preference share Convertible and non convertible preference shres

DEBENTURES
A debentures or a bond is long term promissory note for raising loan capital. The firm promises to pay interest and principal as stipulated. Although the money raised by the debentures becomes a part of the companys capital structure ,it does not become share capital.

FEATURES OF DEBENTURES
Interest rate: - fixed and tax deductible. Maturity: - issued for a specific period of time. Redemption: - mostly redeemable, they are generally on maturity. Indenture: - legal agreement between the companies issuing debenture trustee who represents the debenture holders.

TYPES OF DEBENTURES
Non convertible debentures. Fully convertible debentures. Partly convertible debenture. Secured or unsecured debentures.

BONDS
A bond is a debt instrument that provides a periodic stream of interest payment to investors while repaying the borrowed principal on a specified maturity date. Face (par) value. The price of bond when first issued. The periodic interest payments promised to bondholders are fixed percentages of a bonds face value. This percentage is known as the coupon rate

TYPES OF BOND
Secured bond and unsecured bond Perpetual bonds and redeemable bonds Fixed interest rate bond Floating interest rate bond Zero coupon bonds Deep discount bonds Capital indexed bonds

WARRANTS
A warrant is a certificate entitling the holder to buy a specific amount of shares at a specific price (the exercise price) for a given period.

 If the price of the share rises above the warrant's exercise price, then the investor can buy the security at the warrant's exercise price and resell it for a profit. Otherwise, the warrant will simply expire or remain unused.

ADVANTAGES OF WARRANTS
Warrants make the non convertible debentures and other debentures more attractive and acceptable. Able to create their own market and reduce the companys dependence on financial institutions and mutual funds. The costs of debt are reduced if warrants are attached to it. Warrants are liquid and they are traded in the stock exchanges.