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Presentation on Equity SharesSubject : AFS

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Meaning of Share :

In finance a share is a unit of account for variousfinancial instruments including stocks, mutualfunds, limited partnerships.

By owning a share you can earn a portion andselling shares you get capital gain. So, your returnis the dividend plus the capital gain. However,

you also run a risk of making a capital loss if youhave sold the share at a price below your buyingprice.

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Types of Shares :

Equity Preference

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What is Equity ?

Also known as Ordinary Shares.

Source of permanent capital.

Shareholders are entitled for dividends. Dividend is paid after satisfying all the

expenses of the business.

When Co. is wound up, shareholders canexercise their claim after the claims of other

suppliers of capital have been met.

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IPO : Public issues can be classified into Initial

Public offerings and further public offerings.In a public offering, the issuer makes an offer

for new investors to enter its shareholding

family.

Initial Public Offering (IPO) is when an

unlisted company makes either a fresh issue of

securities or an offer for sale of its existing

securities or both for the first time to thepublic.

IPO is New shares Offered to the public in the

Primary Market

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Types of Issues :

Underwriting of Issues

Private placement.

Rights Issue.

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How to apply for Public Issue ?

When a company floats a public issue or IPO,it prints forms for application to be filled bythe investors.

Public issues are open for a few days only. Asper law, any public issue should be kept openfor a minimum of 3 days and a maximum of21 days.

The duly complete application from,accompanied by cash, cheque, DD should bedeposited before the closing date.

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Features of Equity Share :

Right to Income

Claim on Assets

Right to Control

Voting Rights

Limited Liability

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Characteristics of Equity Shares :

Profit sharing

Highly liquid

Corporate control

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Advantages of Investing in Equity :

From Investors Point of View :

a) Capital Gainb)Claim over Assets and Income

c) Bonus Shares

d)Limited liability

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Disadvantages :

From Investors Point of View :

a) Dividendb)Fluctuation in Market Price

c) Limited Control

d)Residual Claim

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Pros and Cons of Equity

Financing : Pros :

a) Permanent Capital

b)Dividend Payment discretion

c) Borrowing base

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Cons :

a) Cost

b)Earning Dilution

c) Ownership Dilution

d)Risk

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Intermediatries to issue :

Lead Managers.

Registrar to the issue.

Underwriter to the issue.

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Lead Manager : Appointed by the company to manage public

issue program

He should posses valid SEBI registration

Main duties:

Drafting of Prospectus.

Preparing Budget of expenses related to issue.

Suggesting appropriate timings of the issue.

Assisting in marketing of the public issue.

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Registrar : Finalizes the list of eligible allotees after deleting the

invalid application.

Action for crediting the shares to demat account of

applicants.

Dispatch of refund order to those applicable.

Receive the share application from various collectioncentre.

Arrange for dispatching of shares certificate.

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Underwriters :

Underwriting means they will subscribe to the

balance share if all share are not picked up at

IPO.

Can be a banker ,broker or financial

institutions.

Done for a commission.

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Thank You