Presentation on Equity Shares

Subject : AFS

Meaning of Share :
In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships. By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.

Types of Shares :

Equity Preference

What is Equity ?
Also known as Ordinary Shares. Source of permanent capital. Shareholders are entitled for dividends. Dividend is paid after satisfying all the

expenses of the business. When Co. is wound up, shareholders can exercise their claim after the claims of other suppliers of capital have been met.

IPO :
Public issues can be classified into Initial

Public offerings and further public offerings. In a public offering, the issuer makes an offer for new investors to enter its shareholding family. Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. IPO is New shares Offered to the public in the Primary Market

Types of Issues :
Underwriting of Issues Private placement. Rights Issue.

How to apply for Public Issue ?

When a company floats a public issue or IPO,

it prints forms for application to be filled by the investors. Public issues are open for a few days only. As per law, any public issue should be kept open for a minimum of 3 days and a maximum of 21 days. The duly complete application from, accompanied by cash, cheque, DD should be deposited before the closing date.

Features of Equity Share :

Right to Income Claim on Assets Right to Control Voting Rights Limited Liability

Characteristics of Equity Shares :

Profit sharing Highly liquid Corporate control

Advantages of Investing in Equity :

From Investors Point of View : a) Capital Gain b) Claim over Assets and Income c) Bonus Shares d) Limited liability

Disadvantages :
From Investors Point of View : a) Dividend b) Fluctuation in Market Price c) Limited Control d) Residual Claim

Pros and Cons of Equity Financing :

Pros : a) Permanent Capital b) Dividend Payment discretion c) Borrowing base

 Cons : a) Cost b) Earning Dilution c) Ownership Dilution d) Risk

Intermediatries to issue :
Lead Managers. Registrar to the issue. Underwriter to the issue.

Lead Manager :
Appointed by the company to manage public

issue program He should posses valid SEBI registration Main duties:

Drafting of Prospectus. Preparing Budget of expenses related to issue. Suggesting appropriate timings of the issue. Assisting in marketing of the public issue.

Registrar :
Finalizes the list of eligible allotees after deleting the

invalid application.
Action for crediting the shares to demat account of

applicants.
Dispatch of refund order to those applicable. Receive the share application from various collection

centre.
Arrange for dispatching of shares certificate.

Underwriters :
Underwriting means they will subscribe to the

balance share if all share are not picked up at IPO. Can be a banker ,broker or financial institutions. Done for a commission.

Thank You