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Topic 1: Issue of Shares and Debentures (Full Payment and Installment Basis)

Topic 1: Issue of Shares and Debentures (Full Payment and Installment Basis). Hjh Azmi Aminuddin. Shares and debentures can be issued by using the following bases and prices:. Payable in full on application – at par, premium or discount Payment by installment - at par, premium or discount.

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Topic 1: Issue of Shares and Debentures (Full Payment and Installment Basis)

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  1. Topic 1: Issue of Shares and Debentures(Full Payment and Installment Basis) Hjh Azmi Aminuddin

  2. Shares and debentures can be issued by using the following bases and prices: • Payable in full on application – at par, premium or discount • Payment by installment - at par, premium or discount

  3. Payable in full on application Issue of shares/debentures at par Receipt of money during application • Dr Bank • Cr Application : OSC/PSC/Debenture Refund excess application • Dr Application : OSC/PSC/Debenture • Cr Bank Recognize OSC/PSC/Debenture • Dr Application : OSC/PSC/Debenture • Cr OSC/PSC/Debenture

  4. Issue of shares/debentures at a premium Receipt of money during application • Dr Bank • Cr Application : OSC/PSC/Debenture Refund excess application • Dr Application : OSC/PSC/Debenture • Cr Bank Recognize Share Premium/Debenture Premium • Dr Application : OSC/PSC/Debenture • Cr Share Premium/Debenture Premium Recognize OSC/PSC/Debenture • Dr Application : OSC/PSC/Debenture • Cr OSC/PSC/Debenture

  5. Issue of shares/debentures at a discount Receipt of money during application • Dr Bank • Cr Application : OSC/PSC/Debenture Refund excess application • Dr Application : OSC/PSC/Debenture • Cr Bank Recognize Share Discount/Debenture Discount • Dr Share Discount/Debenture Discount • Cr Application : OSC/PSC/Debenture Recognize OSC/PSC/Debenture • Dr Application : OSC/PSC/Debenture • Cr OSC/PSC/Debenture

  6. Payment by installment: application, allotment, call (theory only) Payment in a few stages (RM1.00 + 20 sen share premium): • application stage 10 sen • allotment stage 40 sen • 1st Call 20 sen + 20 sen SP • 2nd and Final Call 30 sen

  7. Companies facing: • a risk of non payment by shareholders (Forfeiture of Shares) • a situation of early payment by shareholders (call in advance) • a situation of late payment by shareholders (call in arrears) • A reissue of forfeited shares

  8. Call in advance, Call in arrears, • Call in advance : eg. a situation whereby a shareholder is supposed to pay for the installment during 1st Call but he actually paid early during allotment stage • Call in arrears : eg a situation whereby a shareholder is supposed to pay for the installment during 1st Call but only paid later during 2nd Call.

  9. Forfeiture of shares • Shares not paid for when call was made being forfeited • Owner of the forfeited shares is no longer a shareholder

  10. Reissue of forfeited shares • Forfeited shares can be reissued • Forfeited share reserve is created (amount already paid) • Any premium from the reissue is recognised as Share Premium

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