Share Capital for Companies – How Share Capital Works скачать в хорошем качестве

Share Capital for Companies – How Share Capital Works

What exactly is the Share Capital for Companies? Share capital represents the funds a company generates by issuing common or preferred stock (referred to as ordinary and preference shares in commonwealth countries, respectively, and these terms will be used in this discussion). This company share capital is acquired from shareholders or investors. The level of share capital or equity financing a company possesses can fluctuate over time due to additional public or private offerings. The interpretation of a company share capital can vary slightly based on the context. In financial accounting, a more specific definition is often used, indicating the total funds amassed by the company through the sale or issuance of shares, as indicated on the balance sheets of both public and private entities. In simple terms, a company share capital is the money it raises by issuing shares to investors in the case of public companies, and to shareholders in the case of private companies. 0:00 – Disclaimer & Intro 1:04 – What is Share Capital 2:12 – How Share Capital Works 4:23 – Company Authorized Share Capital 5:12 – Issued Share Capital Company 6:19 – Share Capital on Balance Sheet 7:32 – Commonly Asked Questions 8:12 – Share Capital and Company Law 18:53 – Disclaimer, Views, Opinions, & Statements How Share Capital Works: Share Capital for Companies is recorded by a company on its balance sheet under the shareholders' equity section. This information may be divided into separate line items based on the source of the funds, typically including lines for ordinary shares, preference shares, and additional paid-in capital. Common or preference shares are usually reported at their par value at the time of sale, although this is not always the case. We published a video on the differences between par value and no par value shares, so we encourage you to watch it for added context and understanding. In modern business, the "par" or face value is generally a nominal figure. Any amount received by the company above the par value is reported as "additional paid-in capital." The amount of share capital reported by a company on balance sheet includes only the payments received for shares purchased directly from the company. Subsequent sales, issues, or purchases of those shares, as well as fluctuations in their market prices, do not affect the company share capital (this applies to publicly listed companies). A company may choose to conduct additional public offerings after its initial public offering (IPO). The proceeds from these subsequent sales would increase the share capital on balance sheet. Share Capital Classes. The term "company share capital" can have slightly different meanings depending on the context. When referring to the amount of money a company can legally raise through the sale of stocks or shares, there are various categories of share capital. 1. Company Authorized Share Capital: Before a company can raise equity capital, it must obtain permission to sell its stock or shares. The company needs to specify the total amount of equity it aims to raise and the base value of its shares, known as the par value. The maximum amount of share capital a company is allowed to raise is referred to as its authorized capital. This does not limit the number of shares a company may issue, but it sets a ceiling on the total amount of money that can be raised from selling those shares. For instance, if a company is authorized to raise $10 million with a par value of $1 per share, it can issue and sell up to 10 million shares. 2. Issued Share Capital Company : The total value of the shares a company chooses to sell to investors or shareholders is known as its issued share capital. The par value of the issued share capital cannot exceed the authorized share capital. In some regions, companies can issue called-up shares to investors or shareholders, with the understanding that they will be paid in full at a later date. 3. Outstanding Share Capital or Stated Capital: This includes the total value of all shares a company issues, excluding any shares it has bought back (known as treasury shares). Even if shares have been issued to insiders or promoters, they are still part of the outstanding share capital. In Mauritius, where I operate, the term "stated capital" is used to describe this structure. 4. Share Capital on Balance Sheet: The technical accounting definition of share capital is the par value or consideration value of all equity securities or shares, including ordinary and preference shares, sold to shareholders. Non-accountants often include the stock price in excess of par value in the share capital calculation. Typically, the par value of shares is nominal, usually $1 or less. ---------- Background Music: Snowfall – Scott Buckley (No Copyright Music)    • Snowfall – Scott Buckley (No Copyrigh...   ----------