Topic: ISSUE
OF SHARES
Types of Shares
(1)
Ordinary Share – these are the risk takers
(2)
Preference Shares – to be paid first because they are co-owners
of the company and also take part in management
We have four types of preference shareholders:
a.
Redeemable
– the company are obliged to pay
b.
Unredeemable
– the company is not obliged to pay
c.
Accumulative preference shareholder –
this, the company will pay even if they did not pay in the current
year. Thereby it will accumulate and
carried over to the next year where they will pay the accruals.
d.
Non accumulative preference shareholder –
TYPE OF ISSUES
1.
Public Issues – this is the type that is made public to
everyone and subscribers can verify the prospectus to know if the company is
strong enough. There is always 5 years financial statement
2.
Private placement – this is to selected persons
3.
Right issue
– this is an issue of shares to shareholder of the company. Those that are already have shares with the
company.
4.
Bonus issue
– this is like jara – compensating the existing share holders with more shares.
Shares could be sold at:
i.
At Par – this is
the original price in the memo of association
ii.
At Premium –
selling above At Per
SOME TERMS:
1.
Issue Price
– the price for the share – the price it will be issued
2.
At Par Value or nominal value or face value – this is the original or face value stated
in the company memo of association
3.
Right Price
– this is the price or the right issue that are issued to existing holders.
This price is for the existing shareholders only.
4.
Premium
– Company Allied Matters Acts CAMA 1990 section 120 support (At per
Premium). It is the price above the At
Par
5.
At discount
– selling at a price below the At Par and CAMA 1990 section 121 support this.
Note: Ex-Div
is when you are selling your shares but you still maintain your dividend while Cum-Div is when you sell but you don’t
maintain your dividend.
Debenture: - is when a company collects loan from an
Individual. It is a credit like a
loan. The money an individual lend to a
company is called Debenture: The individual will be paid interest on a regular
basis. But if the company cannot pay, it
could be converted to share if accepted by the lender. When converted, it is called conversion
issue.
FORFEITURE
OF SHARES
If a shareholder failed to pay a call or
installment on the due date, the directors of the company are empowered by
section 140 of CAMA to forfeit the shares provided the defaulting shareholder
have been served at least a 14 days’ notice.
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