Corporate Accounting

What is the Procedure to Issue Shares for Capital?

Raising Share Capital

When a publicly-traded business wants to raise money by selling its shares to members of the general public, it is required to extend an invitation to those members of the public to place orders for the shares.

Therefore, the individual who has the intention of becoming a shareholder is required to subscribe to those shares by submitting an application to the firm for the appropriate number of shares. As a direct result of this, the corporation will provide the applicant with shares.

Allotment refers to the process of allotting or assigning a certain number of shares to an applicant as a response to that applicant’s application for those shares. The number of shares that may be subscribed for by the general public via the prospectus is the maximum that the corporation can make available for distribution.

In addition, the firm will not be allowed to issue any allotments until the prospectus-required minimum number of subscriptions has been received, as well as the payment that is due upon application for the minimum amount of subscriptions.

If the number of shares that were applied for was lower than the number of shares that were available, the allocation could only be for the shares that were applied for, but only if the minimum subscription was increased.

It is possible to issue shares either in exchange for cash or for some other kind of payment.
In most cases, money is exchanged for the issuance of shares. The corporation has the option of calling the money owed on the shares all at once, in two or more instalments, or in several instalments.

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