ACCT 1A Lecture Notes - Lecture 8: Underwriting, Share Capital, Institutional Investor
25 Aug 2020
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Recall that assets = liabilities + shareholder"s equity. Shareholder"s equity consists of share capital, retained profits and reserves. Change in retained profit = profits dividends paid (interim paid and final dividend declared) + in/out from reserves. Reserves are direct adjustments to equity, instead of changing revenue/profit. Issuing equity is a way to raise funds and for takeover defence. We have different types of shares: ordinary, preference, founder and deferred. When we issue shares, there are usually a few steps: offer, application, allotment of shares. Issuing to an institutional investor or private placement: we would simply, Issuing publicly (initial public offering/ipo) payable in full on application: Cr share capital: receiving applications at a: Money does not belong to the company (yet: allotment at b: (company"s money: in case of excess applications: Issuing publicly (initial public offering/ipo) payable by instalment: We have steps: application, allotment, allotment payment (due later), and call for final payment: receiving applications at a, allotment at b:
