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The effect of this provision of Companies Act, 2013 is different for different stockholders. The most probable reason for the implementation of this section can be:
Companies:
This provision allows the companies to lure the investors to buy their shares in order to raise their share capital rapidly.
Investors:
It provides investors the flexibility in managing their financial restrictions and allows them to expand their portfolio.
Regulators:
They ensures that the flexibility given to them should be within boundaries and no exploitation of investors can be done by the corporations.
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What is the journal entry to record initial called-up equity share capital?
Called up share capital a/c Dr. To share Forfiture A/c To Unpaid Call Amount A/c
What is unpaid capital?
Unpaid share capital is where none of the monies due for an allotment of shares which have been issued has been paid.There is no requirement, unless specified in the company's memorandum and articles of association, for share capital to be paid up. The only exception to this is where a company is being dissolved. Although the shareholders might enjoy limited liability protection, their obligation to pay for the shares which have been issued to them is not diminished.Unpaid share capital is capital that has been subscribed but for which no capital call has yet been issued.
What is the effect of a bonus issue on the share capital and share premium account?
Bonus shares increases the share capital while reduces the share premium account because amount of share premium is used to issue bonus shares.
How is drawings treated in the balance sheet?
Share Capital is the amount invested by the owners of business into the business.Drawings is the amount withdrawn by the owners of business.So it is not surprise to show the drawings from deduction from the share capital because net effect is the reduction of the share capital of the owners of the business.
What increases the more you share it with others?
The answer is "happiness." Happiness increases the more you share it with others because spreading joy and positive experiences can create a ripple effect, enhancing feelings of joy and connection among a group of people.
Does share capital effect borrowing power?
Yes if company has to maintain certain debt equity ratio then it can affect the borrowing power as more share capital will be adjusted to correspondant debt ratio.
What are types of share capital?
Following are different types of share capital. 1 - Preference share capital 2 - Common share capital
Do you use the authorised share capital or issued share capital when getting the dividends declared?
issued share capital
Difference between issued share capital and equity share capital?
The authorised capital which is issued to the public is known as issued capital equity share capital is one of the class of capital
What are the difference between equity share capital and preference shares capital and examples?
Preference share capital is type of capital which has preference on other type of share capital as preference share capital may have more profit ratio than other and it is paid first from profit of company and preference share holders get there share even if company has earn no profit. Equity share capital is share capital on which share holders get share from profit in the last after paying every other obligation on company. Detail answer available in related link.
What is nominal share capital?
Nominal share capital is like an authorized share capital. The share capital that the company allowed (the maximum amount) to issue as registered capital when the company is incorporated. It can be changed later by the approval of the shareholders.
What are the types of preference share?
1.cumulative preference share capital 2.non cumulative preference share capital 3.participative preference share capital 4.non participative preference share capital
