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Reissue of Shares Video Lecture | Accounting for CA Foundation

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FAQs on Reissue of Shares Video Lecture - Accounting for CA Foundation

1. What is a reissue of shares?
Ans. A reissue of shares refers to the process of offering and selling previously issued shares to new investors. It involves selling shares that were previously bought back by the company, either through a share buyback or a cancellation of shares. The reissued shares are usually offered at a price determined by the company based on market conditions and investor demand.
2. Why do companies reissue shares?
Ans. Companies may reissue shares for various reasons. One common reason is to raise capital for expansion, acquisitions, or to fund new projects. By selling reissued shares, companies can raise funds without issuing new shares and diluting the ownership of existing shareholders. Reissuing shares can also help companies improve their liquidity, increase market capitalization, and enhance shareholder value.
3. How does the reissue of shares affect existing shareholders?
Ans. The reissue of shares can have different effects on existing shareholders depending on the circumstances. If the reissue is done at a lower price than the original purchase price, it may result in a decrease in the value of existing shareholders' holdings. However, if the reissue is done at a higher price, it can potentially increase the value of existing shareholders' holdings. Additionally, depending on the terms and conditions of the reissue, existing shareholders may have the opportunity to participate in the new share offering.
4. What is the process of reissuing shares?
Ans. The process of reissuing shares typically involves several steps. Firstly, the company needs to obtain necessary approvals from its board of directors, shareholders, and regulatory authorities, if applicable. Once the necessary approvals are obtained, the company determines the price and quantity of the reissued shares. The company then offers the reissued shares to potential investors through a public offering or private placement. After the shares are sold, the company updates its share register and issues new share certificates to the buyers.
5. Are there any legal requirements or restrictions for the reissue of shares?
Ans. Yes, there are legal requirements and restrictions for the reissue of shares that companies must comply with. These requirements vary depending on the jurisdiction and the type of company. In general, companies need to follow the regulations and guidelines set by the relevant regulatory authorities, such as securities commissions or stock exchanges. They may need to file necessary documents, disclose relevant information to investors, and comply with specific disclosure and reporting requirements. It is advisable for companies to seek legal and professional advice to ensure compliance with all applicable laws and regulations.
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