Share capital, Invitation, Application, Allotment, calls and paid-up procedures
Capital of a limited company is divided into shares of a fixed amount . The amount stated in the Memorandum is known as the Authorized Share Capital . For example, this may be shs. 10 million divided into 100,000 shares of shs. 100 per share. This fixed amount per share is called its par or nominal value . A company may not issue share capital in excess of what has been authorized . The actual amount that has been issued to shareholders is termed Issued Share Capital . If in the above example only 80,000 shares have been issued, then the company's issued capital is shs. 8 million. The steps followed when a company issues shares are: Invitation The company invites the public to apply for its shares through a Prospectus which is an offer document that invites the public to subscribe and purchase shares of a company . A Prospectus gives objectives and information on attractiveness of the company. Application The public applies for shares in the company, usually...
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