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TYPES OF BUSINESS
SOLE PROPREITOR
PARTNERSHIP
COMPANY
PRIVATE LIMITED PUBLIC LIMITED
TYPES OF FINANCE
SHARES ORDINARY EQUITY DEBT TERM LOANS, DEBENTURES & BONDS
HYBRID FINANCE WARRANTS, CONVERTIBLES & OPTIONS ALTERNATIVE FINANCING LIKE LEASE, HIRE PURCHASE, VENTURE CAPITAL
SHARES
SHARES
Types Authorised Share Capital Authorised share capital is the number of ordinary shares capital that a firm can raise without further shareholder approval. Issued Capital The portion of the authorised capital offered by the company to the investors is the issued capital. Subscribed Share Capital Subscribed share capital is the number of share (capital) outstanding. Paid-up Capital The actual amount paid by the shareholders is the paid-up capital.
Par (face) Value Par (face) value is a value arbitrarily placed on the shares.
FEATURES OF SHARES
Residual claim to income
ISSUE OF SHARES
IPO
FPO
RIGHTS ISSUE PREFERENCE SHARES QIB
SEBI
MERCHANT BANKERS STOCK EXCHANGES
DEBT
SECURITY / COLLATERAL
COVENANTS
TYPES OF COVENANTS
ASSET RELATED LIBILITY RELATED CASH FLOW RELATED CONTROL RELATED
NEGATIVE
POSITIVE
Trust Indenture When a debenture is sold to investing public, a trustee is appointed through an indenture/trust deed.
Trust (bond) indenture is a complex and lengthy legal document stating the conditions under which a bond has been issued. Trustee is a bank/financial institution/insurance company/ firm of attorneys that acts as the third party to a bond/debenture indenture to ensure that the issue does not default on its contractual responsibility to the bond/ debentureholders. Interest The debentures carry a fixed (coupon) rate of interest, the payment of which is legally binding/enforceable. The debenture interest is tax-deductible and is payable annually/semiannually/quarterly.
ALTERNATIVE FINANCING
VENTURE CAPITAL
ANGEL INVESTOR PRIVATE EQUITY