joint stock company

ACCOUNTS OF JOINT STOCK (
BOOK VALUE:
It is the value of the shares according to the books of accounts of the company. If a . issued only ordinary shares, the book value of an ordinary share is determined by dividing the equity by the number of shares issued (total owners' equity includes undistributed profits of ] the company has issued different classes of shares the owners' equity has to be determined ••: keeping in mind the rights and privileges of each class of shares.
MARKET VALUE:
This is the value of a share as quoted on the stock exchange. The market value suggeasl at which the buyer is willing to purchase and the seller is willing to sell a share. The market vate not the same as either the par value or the book value. Market value is influenced by anticipai profits and political and business conditions.
NOTE:
According to Companies Ordinance 1984, there is no classification of shares. There is i of shares which is called "Ordinary Shares" or "Equity Shares".
ISSUANCE OF SHARES
GENERAL PROCEDURE:
After completing the legal formalities described earlier, the company offers shares £ public. Persons desirous of becoming shareholders of the company apply to the company for of a certain number of shares. This application is to be given on the prescribed form. These apj given to banks approved by the company. Each application must be accompanied with the M the value of shares applied for. After the last date of application has expired, the company gea from all branches of approved banks about the total number of shares applied for and th along with applications. This amount may be called the application money.
If the amount thus collected is equal or more than the amount of rrrniimurn subscript* prospectus, the company proceeds to allot shares to the applicants. If share applications ha-.: in excess of the number of shares offered by the company, the issue is said to be over-subset oversubscribed amount is returned to the applicants.
The decision to allot shares is communicated to applicants by a letter known as allotment. These letters are signed by applicants 'and returned to the company on the basis company prepares share certificates and these share certificates are sent to the applicants. ' shareholders of the company,
ACCOUNTING FOR ISSUE OF SHARES - FIRST OR INITIAL ISSUE:
In the process of raising its minimum subscription, a company invites applicatio^ minimum subscription has beeri raised, the company proceeds to allot the shares. An applic is an offer and the allotment is an acceptance. The allotment of shares is an act of the i applicant for shares becomes the holder of the shares. Assume that Star Co. Ltd. has an of Rs. 10,00,000 divided into 1,00,000 ordinary shares of Rs. 10 each. And that the stated in the memorandum is Rs. 4,00,000. Further assume that the company invites applic shares of Rs. 10 each (Rs. 4,00,000), requiring full payment of Rs. 10 per share applied for i application. Now, persons desirous of becoming shareholders of the company will fillin forms and deposit money with banks (authorized by the company to collect). The money i equal to the number of shares applied for multiplied by the par value. A deadline is fixed : After the close of that date each bank informs the company about the total amount of mone> : on account of share applications.