Sunday, July 25, 2010

Advantages of Issuing Ordinary Shares to a Company

The ordinary dividend will be paid only if distributable profits are available and if the directors decide to pay a dividend therefore there will not be a fixed commitment to pay a dividend to the ordinary shareholders.

The amount of ordinary share capital collected will not be repaid until liquidation of the company. Even at liquidation it will be repaid only if assets remain after settlement of other liabilities.

No security will be needed when issuing ordinary shares when compared to loans where assets should be kept as security

The company has the ability to attract large amounts of money as capital

The ordinary shares can be issued because there is a ready market for it.

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