Bond is also an instrument of acknowledgement of debt. Aug 11, 2018 section 47 to 51 voting rights, variations and calls on shares share capital and debentures duration. Secured and unsecured, registered and bearer, convertible and nonconvertible, first and second are four types of debentures. A debenture is a debt security issued by a corporation or government entity that is not. Preference shares and debentures are two different types of financial instruments respectively representing equity and debt. Section 71 debentures share capital and debentures ca intermediate corporate and other law duration. Share capital and debentures company registration in coimbatore. The certificate of incorporation of a company is issued by registrar of companies as per procedureguidelines given in.
Some of the major differences between equity shares and debentures are as follows. But for trading companies capital is essential at every stage. Fixed value of a share, printed on the share certificate, is called nominal valuepar valueface value. Share is the capital of the company, but debenture is the debt of the company. The companies share capital and debentures rules, 2014. Share capital and debentures rules 2014 corporate law aubsp. Each share forms a unit of ownership of a company and is offered for sale so as to raise capital for the company. Apr 10, 2018 in the companies share capital and debentures rules, 2014, in rule 5, for subrule 3 of, the following subrule shall be substituted, namely.
Nature and types a company is an artificial person created by law, having separate entity with a perpetual succession and a common seal. It may or may not create a charge on the assets of a company as security. Difference between shares and debentures with similarities. Jun 03, 2019 accounting for share capital cbse notes for class 12 accountancy. Companies share capital and debentures amendment rules.
In exercise of the powers conferred under clause aii of section 43. Share certificates are to be issued by a company within a. The shares represent ownership of the shareholders in the company. Sebi grade a 2020 study material practicemock blog. The investor should consider the ratio in which debt is used to finance projects and capital compared to that used for. Total shares capital of a company is divided into a number of small invisible units of a fixed amount called a share. Now, it has two portions par value amount and additional paidin capital amount.
A company usually raises its capital in the form of shares called share capital and debentures debt capital. Sebi companies share capital and debentures rules, 2014. The fixed value of a share is printed on the share certificate and is called nominal par face value of a share. Nov 19, 2018 share is the capital of the company, but debenture is the debt of the company. The term capital, in relation to a company, can be broadly divided into four kinds. The share capital of a company limited by shares shall be of two kinds, namely, equity share capital with voting rights, or.
While shares refers to the share capital of the company. Traditionally, the government issued bonds, but these days, bonds are also being issued by semigovernment and nongovernmental organisations. Mar 12, 2020 preference, or preferred shares give owners preferential dividend payments and equity rights in liquidation. Permission from central government to issue share capital is required if nominal capital exceeds rs. Nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their hard earned money, with an aim of getting better returns. Pdf this paper examines the economic case for rules of company law which. Company a joint stock company is an artificial person, created by law, having separate entity distinct from its members with a perpetual succession and a common seal. The original sum is repaid at a specified future date or it is converted into shares or other debentures. Rate of return the dividend rate on shares fully depends upon the profits that are obtained by the company. Here is a compilation of top six accounting problems on debentures with its relevant solutions. Accounting for share capital cbse notes for class 12. The following are some of the differences between equity shares and debentures.
Share capital of a company is divided into following categories. Equity shares with differential rights has been defined under the rule 4 of. These debentures are issued for a specified period of time. Companies share capital and debentures rules, 2014 apr 01, 2014 rules. Shares are the marketable instruments issued by the companies in order to raise the required capital. These are very popular investments which are traded every day in the. Scanner ca inter share capital and debentures to stay updated with all videos we post follows. In exercise of the powers conferred under clause aii of section 43, subclause d of. Broadly, there are two kinds of share capital of a company limited by shares. Like shares, the market value of a debenture can be used by the holders as collateral security to temporary loans.
If a company needs funds for extension and development purpose without increasing its share capital, it can borrow from the general public by issuing certificates for a fixed period of time and at a fixed rate of interest. Provided that the issuance of sweat equity shares in the company shall not exceed twenty five percent, of the paid up equity capital of the. Its a presentation i made for my class in iipm on shares, capital and debentures, as a part of the subject company law. Rule 18companies share capital and debentures rules, 2014. It consists of preference shares and denotes the capital raised through the issue of preference shares. Debentures are also known as a bond which serves as an iou between issuers and purchaser. The certificate of incorporation of a company is issued by registrar of. Debentures 1 the company shall not issue secured debentures, unless it complies with the. The act defines preference share capital as instruments which have preferential right to dividend payment absolutefixed or advalorem % and preferential repayment. Sebi grade a free study material companies act chapter iv share capital and debentures.
Share capital forms a part of the total capital of the company and shareholders are treated as owners of the company. Share capital and debentures held by any person, shall be prima facie evidence of the title of the person to such shares. Companies use debentures when they need to borrow the money at a fixed rate of interest for its expansion. A debenture is a type of debt instrument that is not secured by physical assets or collateral. Share capital is not a condition precedent for incorporation of a company because the act allows registration of companies without a share capital. Accounting for share capit al share and share capital. Examine whether the request of the shareholders is possible and if so, how the company can alter its share capital as per the provisions of the companies act, 20. Share capital classification and kinds methods of raising. This chapter deals with the accounting for share capital of companies. Further shares can be issued under scheme of esop to other persons than existing shareholders subject to passing of special resolution and such terms as may be prescribed. Companies share capital and debentures amendment rules, 2019 analysis. Today, we are publishing sebi 2020 notes pdf on companies act chapter iv share capital and debentures. Download free printable assignments worksheets of accountancy from cbse ncert kvs schools, free pdf of cbse class 12 accountancy accounting for share capital and debenture assignment chapter wise important exam questions and answers cbse class 12 accountancy accounting for share capital and debenture assignment.
Holder, the holder of shares is known as shareholder. Total amount of sums if any allowed by way of discount in respect of any shares or debentures or allowed by way of commission in respect of any shares or debentures or allowed by way of discount in respect of any debentures since the date of the last return. Capital of the company is divided into a number of small indivisible units of a fixed amount and each unit is called a share. Equity share capital, with reference to any company limited by shares, means all share capital which is not preference share capital. Debentures are backed only by the general creditworthiness and reputation of the issuer. May 26, 2010 share capital of the company can be explained as a fund or sum with which a company is formed to carry on the business and which is raised by the issue of shares. What is the law and procedure for issuing a duplicate share certificate under the provisions of the companies act, 20 in case the original share certificate is lost or destroyed. It consists of debentures and denotes the money raised by the issue of debentures. Debentures are defined as a debt of the company and debenture holders are creditors to the company. On the expiry of that specified time the company has the right to pay back the debenture holders and have its properties released from the mortgage or charge.
Apr 30, 2019 section 71 debentures share capital and debentures ca intermediate corporate and other law duration. Major difference between equity shares and debentures. With differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed, and. Share capital definition, formula how to calculate. Chapter iv sections 43 to 72 of the companies act, 20 deals with the provisions related to share capital and debentures these rules are related to section 43 kinds of share capital, section 54 issue of sweat equity shares, section 55 issue and redemption of preference shares, section 56 transfer and transmission of securities, section 62 further issue of share.
The terms debentures and bonds ar e now being used inter changeably. By investing in a debenture, you are lending your money to a business, with all the risks that this involves. Ca inter corporate and other laws prospectus duration. On the other hand, debentures represent indebtedness of the company. It consists of equity shares and denotes the capital raised by the issue of equity shares.
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