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Sukhpreet Kaur, Lovely Professional University Unit 1: Share Capital – Issue of Shares

Unit 1: Share Capital – Issue of Shares Notes

CONTENTS
Objectives
Introduction
1.1 Meaning and Categories of Share Capital
1.2 Classes of Shares
1.3 Issue of Shares
1.3.1 Issue of Shares at Premium (Under Section 78)
1.3.2 Issue of Shares at a Discount (Under Section 79)
1.3.3 Issue of Shares at Par
1.3.4 Issue of Shares at Calls-in-Arrear and Calls-in-Advance

1.4 Undersubscription and Oversubscription
1.5 Combined Account for Share Application and Allotment
1.6 Issue of Shares for Consideration Other than Cash
1.7 Summary
1.8 Keywords
1.9 Review Questions
1.10 Further Readings

Objectives

After studying this unit, you should be able to:

 Understand meaning of Share Capital
 Know classes of shares
 Define issue of shares
 Explain under and Over Subscription

 Understand issue of shares for consideration other than cash

Introduction

Share capital refers to the portion of a company's equity that is obtained by trading stock to a
shareholder for cash or an equivalent item of capital value. The term has several meanings. In
classical sense, share capital comprises the nominal values of all shares issued (that is, the sum
of their "par values").

In a wider sense, if the shares have no par value or the allocation price of shares is greater than
their par value, the shares are said to be at a premium (called share premium, additional paid-
in capital or paid-in capital in excess of par); in that case, the share capital can be said to be the
sum of the aforementioned "nominal" share capital and the premium. In the modern law of
shares, the "par value" concept has diminished in importance, and share capital can simply be
defined as the sum of capital (cash or other assets) the company has received from investors for
its shares.

LOVELY PROFESSIONAL UNIVERSITY 1