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Issue of Shares Video Lecture - CA Foundation

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FAQs on Issue of Shares Video Lecture - CA Foundation

1. What is the significance of issuing shares in a company?
Ans. Issuing shares in a company is significant as it allows the company to raise capital by selling ownership stakes to investors. This capital can be used to fund business operations, expansion, or investments. Additionally, issuing shares also helps in distributing the financial risk among a larger group of shareholders.
2. What are the different types of shares that can be issued by a company?
Ans. A company can issue different types of shares, including common shares and preferred shares. Common shares represent the basic ownership in the company and give shareholders voting rights and the opportunity to receive dividends. On the other hand, preferred shares usually do not have voting rights but have a preference in receiving dividends and assets during liquidation.
3. How are shares issued in a company?
Ans. Shares are typically issued by a company through a process known as an Initial Public Offering (IPO) or a private placement. In an IPO, the company offers its shares to the general public for the first time, whereas in a private placement, shares are offered to a select group of investors. The company sets a price for the shares based on various factors such as market demand, company valuation, and investor sentiment.
4. What are the legal requirements for issuing shares in a company?
Ans. The legal requirements for issuing shares in a company vary depending on the jurisdiction and the type of company. Generally, companies need to comply with regulations related to share capital, share certificates, shareholder rights, disclosure requirements, and approvals from regulatory authorities. It is advisable for companies to consult with legal and financial professionals to ensure compliance with all applicable laws and regulations.
5. Can a company buy back its own shares after they have been issued?
Ans. Yes, a company can buy back its own shares after they have been issued. This process is known as share repurchase or share buyback. Companies may choose to buy back shares for various reasons, such as returning surplus cash to shareholders, increasing earnings per share, or reducing the number of outstanding shares to enhance control. The buyback can be done through open market purchases or through a tender offer to shareholders. However, there are legal and regulatory requirements that need to be followed when conducting a share buyback.
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