Page 321 - VIRANSH COACHING CLASSES

Types/Methods of Issue of Share Capital -
1. Right Issue {Sec. 62) to equity shareholders.
2. Employee Stock option scheme (Sec. 62 (1) (b) to employees. (ESOS)
3. Any person (Sec. 62 (l)(c))

a) i) Private placement of shares (Sec. 42)
ii) Preferential Allotment of shares (R 13 of co. SCO Rules) to shareholders only. Public
Issue of shares
c) Sweat Equity Shares (Sec. 54) issued to Directors or employees.
4. Issue of Bonus shares to members/shareholders (Sec, 63 (1))
Issue of Share Capital

Sr. Type of Private Public Meaning Accounting
No. Securities Company Company Treatment
1. Right Issue 3 3 Right shares are Accounting entries in the
issued by the books of the
company to its company for right
existing Issue are the same
shareholders usually as those for issue of
at a discounted ordinary shares to
price. Existing the public
shareholders are
given priority or
right of purchasing
those shares.
2. Empolyees 3 3 These shares are Accounting value is
Stock allotted to the based on fair value and
Option employees at the rate intrinsic value of option
Scheme less than the market Employees compensation
price. This scheme expenses account. Deferred
encourages its employees compensation
employees to acquire expenses etc. are the new
ownership in the form accounts opened.
of shares.
3. a. Private 3 3 Any offer or invitation These transaction avoid the
Placement to subscribe or issue time consuming process of
of securities to any having securities registered
selected person or for sale to the general public
group of person. through SEBI.
b. Public 7 3 Public offer is the Generally, company issue
Offer offering of securities its shares on IPO. The
which are listed on capital collected recorded
a stock exchange to as stockholder equity in the
general public. Balance Sheet.

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