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4B Share Capital and Debentures Video Lecture | Corporate & Other Laws for CA Intermediate

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FAQs on 4B Share Capital and Debentures Video Lecture - Corporate & Other Laws for CA Intermediate

1. What is the difference between share capital and debentures?
Ans.Share capital refers to the funds raised by a company through the issuance of shares, which represent ownership in the company. Debentures, on the other hand, are a type of debt instrument that companies issue to borrow money, promising to pay back the principal along with interest over a specified period.
2. How are shares classified in terms of share capital?
Ans.Shares can be classified into various categories, including equity shares, preference shares, and redeemable shares. Equity shares give holders voting rights and dividends based on profits, while preference shares have a fixed dividend and priority over equity shares in asset distribution. Redeemable shares can be bought back by the company after a certain period.
3. What are the advantages of issuing debentures for a company?
Ans.Issuing debentures allows a company to raise capital without diluting ownership, as debenture holders do not have voting rights. Additionally, the interest paid on debentures is tax-deductible, which can reduce the overall cost of financing. Debentures can also be issued for a fixed term, providing clear repayment timelines.
4. What are the key features of equity shares?
Ans.Equity shares typically have features such as voting rights, dividends that fluctuate based on company performance, and a claim on residual assets in case of liquidation. They carry higher risk compared to preference shares but also offer the potential for higher returns through capital appreciation and dividends.
5. What is the process for issuing debentures in a company?
Ans.The process for issuing debentures generally involves obtaining approval from the board of directors, creating a debenture trust deed, determining the terms of the debenture (such as interest rate and maturity), and finally, issuing the debentures to investors. Compliance with regulatory requirements is also essential throughout this process.
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