what is corporate action? wt is the purpose and tpes of
corporate actions?
Answer Posted / guest
A corporate action is an event initiated by a public
company that affects the securities (equity or debt) issued
by the company. Some corporate actions such as a dividend
(for equity securities) or coupon payment (for debt
securities (bonds)) may have a direct financial impact on
the shareholders or bondholders; another example is a call
(early redemption) of a debt security. Other corporate
actions such as stock split may have an indirect impact, as
the increased liquidity of shares may cause the price of
the stock to rise. Some corporate actions such as name
change have no direct financial impact on the shareholders
Purpose:1).Return profits to shareholders
2).Influence the share price
3).Corporate Restructuring
Types:1).Mandatory Corporate Action(ex: its includes stock
splits, mergers, and spinoffs) 2).Voluntary Corporate(it
includes rights issue, making buyback offers to the share
holders while delisting the company from the stock exchange
etc.)
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my boss (Managing Partner of a firm) promoted along with his wife a private limited company. he and she spent some Rs. 75,000/- (approx) for the promotion of the company. i know that they usually fall under the head of preliminary expenses. but after receiving the certification of incorporation of the company how shall i repay them to the promoters i.e. what is the accounting entry in the books (initial books of accounts) for the expenditure incurred. they have kept in hand 5,00,000/- each to meet the expenses and they were allotted shares of equal to the amount. can i allot shares for a consideration of cash from and excluding the preliminary expenses. can i take cash towards the share application money (being the cash more than Rs. 20,000/-) as the company has not opened a bank account yet. please give me the detailed answer with journal entries that can be entered in tally. thank you.
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