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Issue of Shares, Debentures, Underwriting & Bonus Shares- Introduction Video Lecture | Advanced Corporate Accounting - B Com

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FAQs on Issue of Shares, Debentures, Underwriting & Bonus Shares- Introduction Video Lecture - Advanced Corporate Accounting - B Com

1. What is the process of issuing shares and debentures by a company?
Ans. When a company decides to issue shares, it first needs to obtain approval from its board of directors. The company then determines the number of shares to be issued, their face value, and the price at which they will be offered to the public. Debentures, on the other hand, are issued as a form of loan capital where the company promises to repay the principal amount along with interest at a specified date in the future.
2. What is the role of underwriting in the issuance of shares and debentures?
Ans. Underwriting is a process where a financial institution or an individual agrees to purchase any unsold shares or debentures issued by a company. This ensures that the company will receive the necessary funds even if the public response to the issuance is not as expected. In return, the underwriter charges a fee for taking on this risk.
3. How are bonus shares different from regular shares?
Ans. Bonus shares are additional shares given to existing shareholders of a company without any additional cost, based on the company's accumulated profits. They are issued as a way to reward shareholders without distributing cash dividends. Regular shares, on the other hand, are shares that are issued to the public for a specific price.
4. Can a company issue both shares and debentures at the same time?
Ans. Yes, a company can issue both shares and debentures simultaneously. This allows the company to raise capital through different means and cater to the varying investment preferences of investors. The company needs to comply with the regulatory requirements for both share and debenture issuances.
5. What are the key advantages of issuing bonus shares for a company?
Ans. Issuing bonus shares can help improve the company's liquidity position as it does not involve any cash outflow. It can also enhance the company's image in the market and increase investor confidence. Additionally, bonus shares can be a way for the company to utilize its accumulated profits effectively while rewarding existing shareholders.
89 videos|52 docs|22 tests
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