Equity Funding Back

Equity Funding

Equity Funding basically denotes a fund raising for business through sales of an ownership interest. Equity financing not necessarily refers only to issue of equity shares but also includes equity related instruments such as convertible preference shares, warrants etc, which ultimately results participation in ownership of the company. The Investor of equity shares is entitled for voting rights, sharing of profits and distribution of surplus fund at the time of winding-up of the company.




KEY TERMINOLOGIES RELATED TO EQUITY SHARES

Authorized Share Capital refers to the maximum amount of capital which is permitted to be issued by a company.

Issued Share Capital refers to the number of shares offered to investors for subscription. Total issued shares cannot exceed the Authorized Capital

Subscribed Share Capital refers to the number of shares accepted by investors. Total subscribed shares cannot exceed the issued Share Capital.

Paid Up Capital refers to number of shares for which amounts has been received by the company as per terms of issue.

Face Value / Nominal value of share refers to original value of a share as determined in the Articles of Association of the company

Share Premium refers to the additional price charged over the ordinal price or face value of the share.

Issue Price refers to the price at which the shares are being issued by the company. This issues price comprises of face value and premium if any.

Rights Share refers to shares issued to the existing shareholders of a company in proportionate to number of shares held by them.

Bonus Share refers to free shares issued to the existing shareholders of a company.

Partly Paid up Shares refers to shares for which only part of the amount has been received by the company.

Sweat Equity Share refers to the shares issued to Employees of the company for their outstanding contribution or providing know-how or intellectual rights to the company.

Book Value of share is total of paid up capital and reserves of the company divided by total number of outstanding shares.

Market Value refers to value of share quoted in stock exchanges, if it is listed.

Market Cap refers to total market value of equity i.e. total number of outstanding shares multiplied by market value per share.


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