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J.n.mathu training material2RAISING AND MAINTENANCE OF CAPITALCONTENTS1RAISING OF CAPITAL Meaning of "capital"Classes of capital Method of public issueThe prospectus issueStatutory provisions and cases relating to prospectusAllotment of shares Commencement of business2MAINTENANCE OF CAPITALIssuing of shares at a discountUnderwriting commissionBrokerageIssuing of shares at a premiumPurchase of own sharesFinancial assistance of acquisition of own sharesAlteration of capitalReduction of capitalRedemption of shares3DIVIDENDS1.RAISING OF CAPITAL1.1MEANING OF CAPITALIn commercial parlance, the word `capital' is generally used to denote the amount by which the assets of a business exceed its liabilities. However, in legal parlance the word "capital" is used to denote the amount of money which a company raises from a sale of its shares, or what represents that money.1.2TYPES OF CAPITALA company's capital at any given moment may consist of:a)NOMINAL OR AUTHORISED CAPITALThis is the capital that is stated in the memorandum of association pursuant to S.5 (4) a) of the Act. It is called "nominal capital" because it is calculated on the basis of the "nominal" or book value of the shares into which it is divided. It is `authorised' in the sense that, once the memorandum of association is registered, the company can take immediate steps to raise the capital from the public without applying for a permit or license to coll

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