{"id":126,"date":"2016-04-19T07:57:42","date_gmt":"2016-04-19T07:57:42","guid":{"rendered":"http:\/\/atmateen.com\/?p=126"},"modified":"2016-04-19T07:57:42","modified_gmt":"2016-04-19T07:57:42","slug":"methods-of-raising-capital-for-company","status":"publish","type":"post","link":"https:\/\/atmateen.com\/methods-of-raising-capital-for-company\/","title":{"rendered":"Different Methods of Raising Capital for a Company"},"content":{"rendered":"\n
A company has different methods of raising capital\/funds for different purposes depending on the periods ranging from very short to fairly long duration. Methods of raising capital depend on the need of a company considering the nature and size of the business. The scope of raising capital for a company also depends on the sources from which funds may be available.<\/p>\n\n\n\n
The business forms of sole proprietor and partnership have limited opportunities and methods of raising capital. But a company limited by share or private limited company has different methods of raising capital. These companies can finance their business by the following means:-<\/p>\n\n\n\n
Companies can raise finance through several methods. To raise long-term and medium-term Capital capital, they have the following options:-<\/strong><\/p>\n\n\n\n Read Also:<\/strong> Accountability and Independence of SECP<\/a><\/p>\n\n\n\n Whether its public company, private company, corporation, or a real state company, therea re following methods of raising capital.<\/p>\n\n\n\n It is the most important method. The liability of shareholders is limited to the face value of shares, and they are also easily transferable. A private company cannot invite the general public to subscribe for its share capital and its shares are also not freely transferable. But for public limited companies, there are no such restrictions. There are two types of shares:-<\/p>\n\n\n\n The rate of dividend on these shares depends on the profits available and the discretion of directors. Hence, there is no fixed burden on the company. Each share carries one vote.<\/p>\n\n\n\n The dividend is payable on these shares at a fixed rate and is payable only if there are profits. Hence, there is no compulsory burden on the company’s finances. Such shares do not give voting rights.<\/p>\n\n\n\n Companies generally have powers to borrow and raise loans by issuing debentures. The rate of interest payable on debentures is fixed at the time of issue and is recovered by a charge<\/a> on the property or assets of the company, which provide the necessary security for payment.<\/p>\n\n\n\n The company is liable to pay interest even if there are no profits. Debentures are mostly issued to finance the long-term requirements of business and do not carry any voting rights.<\/p>\n\n\n\nMethods of Raising Capital for a Company<\/h2>\n\n\n\n
1. Issue of Shares<\/h3>\n\n\n\n
A. Equity shares<\/h4>\n\n\n\n
B. Preference shares<\/h4>\n\n\n\n
2. Issue of Debentures<\/h3>\n\n\n\n