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Are these true:
1. Public companies can issue shares at any price they want but does it have to be higher than stated nominal price, or this is the case for re-issuing the shares?
2. Both the Public and Private companies can issue shares but they must have to be registered in stock exchange before they can issue shares legally?
3. Public companies issue shares to raise money in stock exchange to the general public?
4. Private companies can issue shares to raise money in stock exchange but it is not for general public but for other companies to buy them?
5. Rights shared issue is when we issue split shares to our existing shareholders to raise further money from them to buy more fixed assets. Is it true it is like issuing the shares the second time that will increase our share capital eventually?
6. Bonus shares are issued when the company has to split the existing shares weightage to lower the share price in the market?
I shall answer this post of yours because it is more orientated towards the Law paper than the FA Paper. So, much of what you are asking is irrelevant to the FA paper. And with reference to the FA Paper, John’s free lectures, videos and course notes cover the syllabus in as great a depth as you may ever need for your ACCA studies
1 Doesn’t have to be higher, but mustn’t be lower
2 False
3 False (a public company does not necessarily mean that it is registered on a stock exchange)
4 False
5 Not necessarily to buy more fixed assets and I don’t understand why you have written ‘eventually’
6 A company doesn’t ‘have to split’. But if the company wishes to reduce the market price of its shares, then a bonus issue will achieve that objective
OK?
Let me know if i understood all of this correctly.
1. Public companies can issue shares at any price for the first time but when they issue the shares again then they should not issue shares at less than the nominal value?
2. I don’t get this honestly – you are saying that both the public and private companies can issue shares without listing in the stock exchange but then it must not be issued for general public!?
3. You are saying that public companies may or may not be listed in stock exchange but both of them can issue shares by law?
4. I don’t know where I am wrong here – Private companies can issue shares with or without listed on stock exchange?
5. Rights shares are issued to raise more money for the business for any future prospects but the only reason for rights shares are to raise more money?
6. The only reason we issue bonus shares is to reduce the market price of a shares in the stock exchange or there are other reasons as well?
Thanks though for your time.
Yasir, these are not questions that are relevant to your Paper FA studies.
In fairness to other students who are studying law, these questions and my answers should be on the Ask ACCA Law Tutor forum,=.
So I’m going to ask you to repost on that forum and I shall get back to you
OK?
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