Companys Act I.ppt gbybybybybybybybynuhuh

Skibidi

1. Accounting for issue of shares
and debentures

Define the issue price of sharesDefine the issue price of shares

Differentiate between preference shares, ordinary chares Differentiate between preference shares, ordinary chares
and deferred shares and deferred shares

Distinguish between issued capital, uncalled capital and Distinguish between issued capital, uncalled capital and
share capital or paid-up capital share capital or paid-up capital

Describe the concept of partly paid shares and calls on Describe the concept of partly paid shares and calls on
unpaid share capitalunpaid share capital

Account for public company share issuesAccount for public company share issues

Define the various costs associated with share issues and Define the various costs associated with share issues and
account for those costsaccount for those costs

Differentiate between debentures, mortgage debentures and Differentiate between debentures, mortgage debentures and
unsecured notesunsecured notes

Account for the issue and redemption of debenturesAccount for the issue and redemption of debentures

2. Share Capital
•Owners of companies are called shareholders
•Founding members are also known as subscribers
•All shareholders are sometimes referred to as
members
•Shares in a Public company can be purchased
when the company issues a prospectus
•Shares in a Public company can also be traded on
the stock exchange

3. Issue price of shares

Maximization of shareholder wealthMaximization of shareholder wealth

Effect on the market price of existing sharesEffect on the market price of existing shares

Requirement to sell a desired volume of sharesRequirement to sell a desired volume of shares

Expectation of future profits and dividends to service the Expectation of future profits and dividends to service the
new sharesnew shares

Whether ASX listing is proposed or already existsWhether ASX listing is proposed or already exists

Usage of an underwriter Usage of an underwriter

4. Uncalled and paid up share
capital

Shares can be issued to be paid in full or issued partly paid Shares can be issued to be paid in full or issued partly paid
with the balance paid at a future date(s)with the balance paid at a future date(s)

Amounts to be paid at a future date are referred to as callsAmounts to be paid at a future date are referred to as calls

A company’s share capital is also referred to as paid-up A company’s share capital is also referred to as paid-up
capital = number of shares issued by the amount that the capital = number of shares issued by the amount that the
directors require as payment of sharesdirectors require as payment of shares

The amount not required for payment is referred to as the The amount not required for payment is referred to as the
uncalled amount uncalled amount
Share CapitalShare CapitalUncalled capitalUncalled capital
No of shares No of shares
issuedissued
100,000100,000 100,000100,000
Amt Amt
called/uncalledcalled/uncalled
0.500.50 1.501.50
TotalTotal $50,000$50,000 $150,000$150,000

5. Classes of Shares

Ordinary SharesOrdinary Shares

Preference SharesPreference Shares

Deferred or founder SharesDeferred or founder Shares

6. Ordinary Shares

Basic typeBasic type

Full voting rightsFull voting rights

Right to receive dividendsRight to receive dividends

7. Preference Shares

Preferential rights to a fixed rate of dividends before Preferential rights to a fixed rate of dividends before
dividends to ordinary shareholders are declareddividends to ordinary shareholders are declared

Repayment of capital when company is wound upRepayment of capital when company is wound up

Participation in surplus assets and profitsParticipation in surplus assets and profits

Cumulative and non-cumulative dividendsCumulative and non-cumulative dividends

Voting rightsVoting rights

Priority of payment of capital and dividendsPriority of payment of capital and dividends

8. Deferred or Founder Shares

Issued to initial subscribersIssued to initial subscribers

Dividends usually paid after being paid to other Dividends usually paid after being paid to other
shareholdersshareholders

Founders are shareholders who start up the company Founders are shareholders who start up the company
before shares are issued to the publicbefore shares are issued to the public

Provider establishment costs and issue the prospectusProvider establishment costs and issue the prospectus

9. Share Issue Procedure

Registration of membersRegistration of members

Disclosure of rights and liabilities of share issueDisclosure of rights and liabilities of share issue

The class of share being issuedThe class of share being issued

Share price and no of shares issuedShare price and no of shares issued

The amount that must be paid for each share with the The amount that must be paid for each share with the
application (on allotment and future calls)application (on allotment and future calls)

The minimum subscriptionThe minimum subscription

The allotment processThe allotment process

The treatment of over subscriptionThe treatment of over subscription

10. Procedure for issuing shares
under a prospectus

The Prospectus together with an application form is made The Prospectus together with an application form is made
available to the general public.available to the general public.

Application monies are held in trustApplication monies are held in trust

Minimum subscription must be received before allotmentMinimum subscription must be received before allotment

Allotment at director’s discretionAllotment at director’s discretion

Allotment advice is communicated to the applicantAllotment advice is communicated to the applicant

Allotment monies may be required at this stage.Allotment monies may be required at this stage.

11. Share capital issued upon the
registration of a company
SubscribersSubscribersDrDr
Share Share
CapitalCapital
CrCr
Issue shares to SubscribersIssue shares to Subscribers
BankBank DrDr
SubscribersSubscribers CrCr
Subscriber Receipt upon PaymentSubscriber Receipt upon Payment

12. Share capital issued by
prospectus

Payment in full on applicationPayment in full on application

Part payment on application, balance payable on allotment Part payment on application, balance payable on allotment
of the sharesof the shares

Part payment on application and allotment, with the Part payment on application and allotment, with the
balance payable in callsbalance payable in calls

13. Shares issued fully paid on
application

Fully paid on applicationFully paid on application

Number of shares issued by the directors agrees exactly Number of shares issued by the directors agrees exactly
with the no applied forwith the no applied for

All applicants have been received with the full amountAll applicants have been received with the full amount

14. Shares issued fully paid on
application Journal Entry
General JournalGeneral Journal
Trust Trust
AccountAccount
DrDr
ApplicationApplication CrCr
Record the receipt of monies Record the receipt of monies
from applicantsfrom applicants

15. Shares issued fully paid on
application Journal Entry
General JournalGeneral Journal
ApplicationApplicationDrDr
Share Share
CapitalCapital
CrCr
Allot shares to ApplicantsAllot shares to Applicants

16. Shares issued fully paid on
application Journal Entry
General JournalGeneral Journal
BankBank DrDr
Trust Trust
AccountAccount
CrCr
Issuing of Shares to ApplicantsIssuing of Shares to Applicants

17. Under subscribed and
oversubscribed share issue Jnl
Entry
General JournalGeneral Journal
Trust AccTrust AccDrDr
ApplicationApplication CrCr
Applicants depositsApplicants deposits

18. Under subscribed and
oversubscribed share issue Jnl
Entry Cont.
General JournalGeneral Journal
ApplicationApplicationDrDr
Share Share
CapitalCapital
CrCr
Allot shares to ApplicantsAllot shares to Applicants

19. Under subscribed and
oversubscribed share issue Jnl
Entry Cont.
General JournalGeneral Journal
ApplicationApplicationDrDr
Trust AccTrust Acc CrCr
Refund Applicants depositsRefund Applicants deposits

20. Under subscribed and
oversubscribed share issue Jnl
Entry Cont.
General JournalGeneral Journal
BankBank DrDr
Trust AccTrust Acc CrCr
Issue Shares to Applicants Issue Shares to Applicants