Students Online Tutorial Cl c6 1
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Transcript of Students Online Tutorial Cl c6 1
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Share Capital
Learning Outcome
To understand the different types of share
capital and alteration of share capital To know about the issue of shares at a
premium and discount
To understand the capital maintenancerules
To know the rules on share buybacks
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Classification of Capital
Nominal or authorized capital
The authorized capital is the maximum
amount of capital which a company isauthorized to raise by issuing its shares
Issued capital An issued capital is that part of the
authorized capital of a company which
had been issued to its members
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Classification of Capital
Issued capital
A share is said to be issued and thusforms part of the issued capital of a
company if the name of the shareholder
has been registered in the register of
members in respect of those shares
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Classification of Capital
Paid up capital
The paid – up capital of a company
represents that part of the issued capitalwhich has been fully paid up by thatmembers, or credited as having beenpaid
!hen shares are allotted to a person, hebecomes liable to pay to the company thevalue of the shares allotted in accordancewith the articles
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Classification of Capital
Unpaid capital
An unpaid capital represents that
remaining part of the issued capital of acompany which has not been paid up by
the members and can be called up by the
company in accordance with its Articles
"calls and contributions#
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Classification of Capital
$or example, a company may have anauthorised capital of %&'((,(((
Ordinary shares divided into '((,(((
ordinary shares of %&) each
)((,((( shares is issued
%&*(,((( is paid up
+npaid capital is the remainder of the issuedcapital which has not been paid up ie%&(,(((
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Issue of Shares – Sec
132D
-n the event that the company wishes to
issue new shares, the directors must obtain
the approval of the company in general
meeting – .ec )*'/")# of the 0A
The approval in general meeting is not
re1uired if the shares to be issued are to beused in consideration or part consideration in
exchange for the purchase of shares or
assets – .ec )*'/"2A#
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Issue of shares at a premium
- Sec 6 C!
A company is allowed to issue shares at a
premium
The premium is the sum in excess of their
nominal or face value
The premium must be credited to a share
premium account
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Issue of shares at a premium
- Sec 6 C!
.o if shares issued are valued at %&)3(
per share and but the shareholder pays
%&)4( per share The premium of
%&(*( per share are transferred to a
share premium account
The share premium account may be used
to pay for bonus issue of shares, to payfor balance unpaid on shares issued and
also for payment of dividends
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Issue of Shares !t a
discount – Sec "#
To issue shares at a discount means – at
a price below their nominal value and
shareholder have no further liability to pay
the difference
The conditions for issue of shares at a
discount are –
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Issue of Shares !t a
discount – Sec "#$1%
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Issue of Shares !t a
discount – Sec "#$1%
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Pre-emption &i'hts –
&i'hts Issue
-n order to ensure that existing
shareholders rights are not diluted by new
issue of shares, the Articles of a company
may re1uire that all new e1uity shares
must before they are issued, first be
offered to the existing members in the
proportion of their existing shareholdings
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Pre-emption &i'hts –
&i'hts Issue – (a)le !
Such an offer is called a &i'hts Issue
The shareholders are said to have pre5
emption rights "ie rights of refusal# Listed companies must comply with %ule
2) to 2'4 of the 6&L%
%ights issue is essentially when the
shareholder is given the right to subscribefor ) new share for every ' shares theycurrently hold, for example
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!lteration of Share Capital
The share capital of a company is no
immutable, and can be altered in general
meeting
(he follo*in' modes of alteration of
the capital are authorized )+ section
62$1% C!
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Po*er of compan+ to alter its
share capital – S 62 if authorized
)+ !rticles in 'eneral meetin'
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End of
Chapter 6 (File 1) , !ICS! !ll &i'hts &eser/ed
www.maicsa.org.my