Tuesday, 10 July 2012

Shareholder, Share Capital, Dividend and Debenture

What is a Shareholder?

This is a term you will see and hear in the business world. First there are shares. Shares are the amount of interest a shareholder has in a company. These shares are viewed in financial terms i.e. money.    

§  Shareholders can come in the form of an individual, a group of individuals or a company.

§  Shareholders rights include the right to vote or nominated the directors of the company.

§  The right to sell their own shares or buy shares when they are issued by the firm.

§  Shareholders are also entitled to dividends if they are declared by the company.

To learn more about shareholders check out this website:


Check out these useful videos about shareholders:

Business Laws : What Is a Shareholder?


Uploaded by on Nov 1, 2008

The IT Crowd - Jen Brings the Internet to the Shareholders meeting - WIDESCREEN 


Uploaded by on Dec 14, 2008

What then is Share Capital?

Share capital is the money raised from borrowing, grants, selling of shares or funds from shareholders or investors. There are two types of capital, issued and authorised share capital.
Issued share capital is the number of shares that the company has issued. The amount raised is either lower or the equal amount of the authorised share capital. Authorised share capital is the maximum amount of capital that can be raised for the company.

For example Pacebook decides it needs to raise capital for new investing activities. In their company policy i.e. Memorandum of Association the maximum amount of authorised share capital they can raise is €100 million. The company raised €50 million from issuing new shares to the public and investors.

However raising capital can be difficult for risky start up companies. For example a new start up company called Apod ltd. sells only high quality socks. Apod decides to raise capital by selling shares of the company to outside investors. These investors are also called venture capitalists.

However you do not need to be a new start up company to raise capital.

§  Long term financing can be achieved in the long term with share capital.

§  Shareholders are only liable for the amount of money they invested in share capital.

Check out these links to learn more about share capital:



Check out this video about share capital:

Share capital Categories of share capital 

Uploaded by on Nov 6, 2011

What is a Dividend?

Dividends are the allocation of profits to shareholders of investments. They are declared i.e. proposed by the company’s board of directors. It must be though approved by the shareholders first before any dividends are given out. One of the main reasons why people and firms buy shares in a company is to earn profit.

§  Dividends are a part of the company’s profits which are generally given out to a company’s shareholders.

§      Dividends come in the form of cash, property or stock.

§   Dividends do not happen all the time depending on the company’s policy and the shareholders  decision.
      For example Ryanair are reluctant to pay out dividends to its shareholders but have seldom done it in the past.

Check out this link to see how dividends work

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