share capital

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subhkant rana (Querist)
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05 April 2008 amount of authorised share capital of any company is decided by ?????. I depends upon ???????.

To how much amount company can issue debentures. Is it also authorised or ??????????.

If a authorised share capital of any company is 1 crore, then how much it can issue as equity share capital or preference share capital. and if we issue debenture of rs. 2,00,000 then it will reduce authorised share capital or not.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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05 April 2008 Authorised Capital depends upon how much capital, Equity or preference, the company will be most likely having.

Debentures do not form part of authorised capital

R.V.RAO

R.V.RAO (Expert)
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05 April 2008 AUTHORISED SHARE CAPITAL IS THE NOMINAL OR THE MAXIMUM AMOUNT OF SHARE CAPITAL WHICH A COMPANY HAS POWER TO ISSUE SHARES AS PAID UP SHARE CAPITAL.
IF A COMPANY WANTS TO ISSUE SHARES UPTO TO A CERTAIN AMOUNT,IT SHOULD HAVE A MINIMUM OF THAT AMOUNT AS AHTHORISED SHARE CAPITAL.
ROC FEES DEPENDS UPON THE AUTHORISED SHARE CAPITAL AND APPROX. THE ROC FEES IS RS. 50000/ FOR EVERY ONE CRORE OF AUTHORISED SHARE CAPITAL.
SO THE MORE YOU DECIDE AS AUTH.SHARE CAPITAL, THE MORE ROC FEES YOU HAVE TO PAY,BESIDES THERE IS A STAMPDUTY COST OF 0.15% ON AUTH. SH.CAP.
THE AUTH. SH.CAP. DEPENDS ON UP TO WHAT AMOUNT THE COMPANY WANTS TO ISSUE PAID UP CAPITAL.
DEBENTURES IS DEBT CAPITAL .IT IS NOT OWNERS EQUITY.
DEB. CARRY INTREREST AND EQUITY SHARES CARRY DIVDEND AS REWARD ( IF DECLARED).
THE RATIO BETWEEN PAIDUP SHARE CAPITAL (PLUS FREE RESERVES )AND DEBT CAPITAL IS CALLED DEBT EQUITY RATIO.
THIS RATIO IS USEFUL FOR ANY LENDER OR BANK TO DECIDE A COMPANY'S BORROWING CAPACITY AND PROFITABILITY AS INTEREST PAYABLE ON DEB. IS AN EXP. IN P&L ACCOUNT
AND AN ADMISSIBLE DEDUCTION FOR TAX PURPOSE.
ON THE OTHER HAND DIVIDEND PAYABLE ON EQUITY SHARES IS NOT AN EXP. IT IS AN APPROPRIATION OUT OF PROFITS.
AUTH. SH. CAPITAL CONSISTS OF ONLY EQUITY SH. CAPITAL AND PREF. SH. CAP.ONLY. BUT IT DOES NOT CONSIST OF DEB.WHICH IS A LOAN OR DEBT CAPITAL.
PL.SPELL OUT YOUR DOUBTS IF ANY . WE SHALL CLARIFY FURTHER.
R.V.RAO

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