Understanding Share Issuance

What is the primary purpose of issuing shares?

• To raise capital for the company.

• To reduce the number of outstanding shares.

• To distribute profits among shareholders.

• To increase the company's debt.

What are the different types of shares that can be issued?

• Restricted shares

• Debt shares

• Equity shares, preference shares, ordinary shares, convertible shares

• Bonus shares

How does issuing shares affect a company's capital structure?

• Issuing shares decreases equity and increases debt reliance.

• Issuing shares has no impact on the capital structure.

• Issuing shares only affects the company's cash flow, not its capital structure.

• Issuing shares increases equity and alters the capital structure by potentially reducing debt reliance.

What is the difference between equity shares and preference shares?

• Preference shares are riskier than equity shares and have higher potential returns.

• Equity shares are only available to institutional investors, while preference shares are available to the general public.

• Equity shares have fixed dividends and no voting rights, while preference shares have voting rights and ownership.

• Equity shares have voting rights and ownership, while preference shares have fixed dividends and priority in assets but no voting rights.

What are the advantages of issuing shares for a company?

• Advantages of issuing shares include raising capital, reducing debt burden, enhancing company profile, and attracting investors.

• Reducing market visibility

• Limiting shareholder influence

• Increasing operational costs

What is the process of issuing shares to the public called?

• Private Placement

• Share Buyback

• Initial Public Offering (IPO)

• Secondary Market Offering

How can a company determine the price at which to issue shares?

• By analyzing financial health, market conditions, investor demand, and using valuation methods.

• By consulting a fortune teller

• By following competitor pricing

• By randomly selecting a number

What are the regulatory requirements for issuing shares?

• Companies must comply with securities laws, file necessary documents, prepare a prospectus, and adhere to corporate governance standards.

• Issuing shares does not require adherence to corporate governance standards.

• Only public companies are required to follow securities laws.

• Companies can issue shares without any documentation.

What is a rights issue and how does it work?

• A rights issue is a method for companies to raise capital by allowing existing shareholders to buy additional shares at a discount.

• A rights issue allows companies to buy back shares from the market.

• A rights issue is a way for companies to distribute profits to shareholders.

• A rights issue is a method for companies to merge with other companies.

How does the issuance of shares impact existing shareholders?

• Issuing shares increases existing shareholders' ownership percentage.

• New shares have no effect on the stock price.

• The issuance of shares guarantees higher dividends for existing shareholders.

• The issuance of shares can dilute existing shareholders' ownership and potentially decrease the stock price.