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## Equity and Debt Market (S.Y.B.M.S. : SEM) ### Benefits of Rights Issue: - When an existing company raises further capital by way of shares and/or debentures, then first priority is given to existing shareholders. - If the existing shareholders do not accept such right issue of shares, the righ...

## Equity and Debt Market (S.Y.B.M.S. : SEM) ### Benefits of Rights Issue: - When an existing company raises further capital by way of shares and/or debentures, then first priority is given to existing shareholders. - If the existing shareholders do not accept such right issue of shares, the rights are issued to the public. - The rights are issued by the company either at face value or for a premium. - However, the market value of such shares may be higher. ### Transferability of Shares: - The shares of a public limited company are freely transferable. - If the shareholder wants to sell or transfer the shares, he can easily do so. - However, in case of certain preferential allotment to employees, there is a lock period, say three years or so. - After the expiry of the lock period, the shareholders can sell or transfer such shares. ### Controlling power: - The equity shareholders enjoy control over the management of the company. - They control by electing the Board of Directors. - However, the control over management is manipulated by a few shareholders who hold a substantial number of shares. - This is because the voting rights are in proportion to the number of equity shares held by each shareholder. ### Introduction to Financial Market - No Charge Over Assets - The equity capital does not belong to the firm. - Face Value - Equity shares can be issued with a face value of ₹1/- to even ₹100. - Most of the public limited companies issue equity shares with a face value of ₹10/-. - Increases Shareholder's wealth - Equity shares increase in value when a company makes regular dividend payments and when there is a market boom, the share value increases considerably. - Return to shareholders - The company rewards shareholders for their investment by making profit and a bonus return on capital appreciation. The return to shareholders comes in the form of dividend payouts, cash dividends, and stock splits etc. The return to shareholders is represented by the value of the dividend and appreciation in the capital market. ### Types: - Equity share capital is of two types. As per the Indian Companies (Amendment) Act, 2000, the equity share capital can be: - With voting rights, or - With differential rights as to dividend, voting, or other subject to rules and conditions. ### Table 1.2: (Company Name) - Coal India Ltd. - HDFC Bank Ltd. - Hindustan Unilever Ltd. - Indian Oil Corporation Ltd. - Bharat Petroleum Corporation - State Bank of India - Bajaj Auto Ltd. - Ambuja Cements Ltd. - Power Grid Corporation - GAIL (India) Ltd.