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Types of Share Issuance: Public Offer: Only public companies can invite the public to buy shares. This includes initial public offerings (IPOs) and placements through intermediaries (e.g., banks, brokers). Private Placement: Direct offer to specific investors, commonly used by private companies due to restrictions under Section 7 of Act 992. Rights Issue: Issuing additional shares to existing shareholders in proportion to their holdings (Act 992, Section 189). Capitalization Issue: Profits reinvested instead of dividends, issuing shares to shareholders (Act 992, Section 77). Conversion Issue: Converting debt into equity, including convertible debentures (Act 992, Section 88). Raising Capital through Debt Debentures: A written acknowledgment of a company’s debt, with structured repayment agreements. Bank Loans & Credit Facilities: Raising funds through secured or unsecured loans. Corporate bonds: issued by companies to raise long-term capital. Deposits: Public companies can invite the public to deposit money (Act 992, Section 7(5)). Factors Influencing Capital-Raising Decisions Time Constraints: Urgency of funds. Cost Considerations: Interest on debt vs. equity dilution. Capital Requirements: Amount needed and its purpose. Legal Compliance: Regulatory requirements. Control & Risk Appetite: Directors' preference. Economic & Market Conditions: Macroeconomic Factors. Debt-to-Equity Ratio (Gearing Ratio): The balance between loans and equity. Capital Structure: Equity vs. Debt Equity Capital: Represents shareholders’ stake in the company. Section 51 of Act 992 defines equity shares as those that are not preference shares. Shares are financial instruments that grant rights to dividends and assets upon liquidation. Types of shares: Ordinary (equity) shares: high risk, but higher potential dividends. Preference Shares: Fixed dividends, priority in liquidation. Convertible Shares: Can be converted into ordinary shares. Redeemable Shares: Can be bought back by the company. Debt Capital: Raised through debentures, bonds, and bank loans. Less risk than equity but requires periodic repayment. Interest payments are tax-deductible. Secured debts provide lenders with a charge over company assets. Conclusion Capital is the lifeblood of companies. The choice between equity and debt financing depends on various factors such as cost, control, risk tolerance, and legal obligations. Companies must carefully assess their financing needs to maintain financial stability while ensuring compliance with the Companies Act, 2019 (Act 992).