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Reissues of Shares Video Lecture | Accounting for CA Foundation

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

1. What are reissues of shares?
Ans. Reissues of shares refer to the process of issuing additional shares of a company's stock after they have been previously issued and then repurchased or canceled. These shares are then made available for sale again to investors. Reissues of shares can be done for various reasons, such as raising additional capital or adjusting the company's capital structure.
2. Why do companies choose to reissue shares?
Ans. Companies may choose to reissue shares for several reasons. One common reason is to raise additional capital for business expansion, debt repayment, or funding new projects. By reissuing shares, companies can generate funds without incurring debt. Additionally, reissuing shares can also help adjust the company's capital structure, such as increasing the number of outstanding shares to improve liquidity or dilute ownership.
3. How are reissued shares priced?
Ans. The pricing of reissued shares can vary depending on several factors. Generally, the price is determined by the company's board of directors or through negotiations with investment banks or underwriters. Factors considered in determining the price may include market conditions, demand for the shares, the company's financial performance, and the purpose of the share issuance. The price is often set at a discount to the prevailing market price to incentivize investors to purchase the newly issued shares.
4. What are the implications of reissuing shares for existing shareholders?
Ans. Reissuing shares can have implications for existing shareholders. When new shares are issued, the ownership percentage of existing shareholders may be diluted as the total number of shares increases. This means that each existing shareholder's ownership stake in the company may decrease proportionally. However, if the proceeds from the share issuance are used to generate growth or increase the company's profitability, it can ultimately benefit existing shareholders in the long run.
5. Are there any legal requirements or regulations governing the reissue of shares?
Ans. Yes, there are legal requirements and regulations governing the reissue of shares. The specific requirements may vary depending on the jurisdiction and the stock exchange where the company is listed. Typically, companies need to comply with securities laws, stock exchange rules, and corporate governance guidelines. They may also need to obtain necessary approvals from regulatory authorities and disclose relevant information to shareholders and potential investors. It is crucial for companies to ensure compliance with these regulations to maintain transparency and protect the interests of shareholders.
Video Timeline
Video Timeline
arrow
01:49 Example 1
06:23 Example 2
11:40 Ledger of Share Forfeited A/C
12:42 Recap
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