Financial Mgnt( Shares and Bonds)

8/6/2019 Financial Mgnt( Shares and Bonds)

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SHARE CAPITALSHARE CAPITAL

Share capital means the capital raised by a company by the issue of

shares.

KINDS OF SHARE CAPITAL

(a). Equity share capital- with voting rights

- with differential rights

(b). Preference share capital



DEBENTURESDEBENTURES

The most usual form of borrowing by a company is by the issue

of debentures.

Debentures is a kind of loan taken by the company, who issues

a document with the seal to the investor, and pay them a fixed

rate of interest.



KINDS OF DEBENTURESKINDS OF DEBENTURES

From the Point of view of RegistrationFrom the Point of view of Registration

Registered Debentures Bearer Debentures

Registered Debenture: These debentures which are payable to the registered

holders. The registered holder of the debentures can transfer them like shares,

but the transfer to be complete has to be registered with the company.

Bearer Debentures: These debentures also known as unregistered debentures

are payable to its bearer



From the Point of view of SecurityFrom the Point of view of Security

Unsecured Debentures Secured Debentures

Unsecured Debentures: Debentures which do not create any charge on the

asset of the company are known as unsecured or naked debentures.

However, a floating charge may be created on these debentures by default.

Normally, these kinds of debentures are not issued.

Secured Debentures: Debentures which create some charge on the propertyof the company are known as secured debentures. The charge may be fixed

or floating



From the Point of view of TenureFrom the Point of view of Tenure

Redeemable Debentures Irredeemable Debentures

Redeemable Debentures: Debenture are usually issued on the condition that

they shall be redeemed after a certain period. Such debentures are known as

redeemable debentures. They may be re-issued after redemption in accordance

with the provisions of Sec. 121.

Irredeemable or Perpetual Debentures: A debenture will be treated as

irredeemable where either there is no period fixed for repayment of the

principal amount or repayment of it is made conditional on the happening of an

event which may no happen for an indefinite period or may happen only in

certain specified contingent events.



From the Point of view of ConvertibilityFrom the Point of view of Convertibility

Convertible Debentures Non-convertible Debentures

Convertible Debentures: These debentures give an option to the holders to

convert them into preference or equity shares at stated rates of exchange, after

certain period. The convertible debenture may be fully convertible(FCD) or

partly convertible(PCD).

Non-convertible Debentures: These debentures do not give any option to their

holders to covert them into preference or equity shares. They are to be duly

paid as and when they are mature.

Fully Convertible(FCD) Partly Convertible(PCD)























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Financial Mgnt( Shares and Bonds)