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A shareholder bears the highest risk in the company's operations (but within the limit of his/her stake in the equity of the limited liability company) . Conversely, he/she is also entitled to participate in the earning and wealth of the company (but without any limit). Issue of shares is of advantage to the company, as payment of dividend is discretionary. Equity is not required to be refunded. This instrument is quite popular with individual investors in India. Face value of ordinary shares in India can be any amount from Re. 1 to Rs. 1,000 but the most common denomination of shares is Rs 10. PREFERENCE
SHARES Convertible PS can be converted into ordinary share on terms and condition fixed at the time of issue of such shares. Redeemable preference shares have fixed period of maturity and are repayable at the end of that period. It is because of this property. Such PS are regarded more as a debt instrument than an ownership security Participating
preference shareholders have the best of both the world in as much as they
are not only entitled to a fixed rate of dividend, but can also expect to
earn a higher dividend in case the company makes good profits. |
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