What is share capital and what is share premium?
Share capital means funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time because each time a business sells new shares to the public in exchange for cash, the amount of share capital will increase. Share capital can be composed of both common and preferred shares. In the past all shares had a par value, say $1. When a share was sold at par, it meant that $1 was paid for it. If a share was sold at above par, you said that it was sold at a premium. Let's say a share with par value of $1 was sold for $1.20, the share premium was $0.20. However, increasingly, companies are now issuing shares with no par value, thereby making the concept of share premium obsolete.
Can you start my own business without money?
Generally it is true. Theoretically you could start a small business with no capital, such as a service walking dogs, or washing and polishing your neighbor's car. Technically speaking, even those businesses require some capital: To walk dogs you may have to buy leashes, and you have to wear shoes, so you had to use money to get started. Capital is a prerequisite to starting a business. Just consider some of the things you will need before you start. Paper and pencil for record keeping, a way to promote your business, whether it is a major ad campaign, a classified ad in a newspaper, or a poster on a pole. You may need tools or other equipment. Much depends on the business. Some businesses require millions to get started. Others can be started with only a few thousand dollars.
Indian Businesses: Which is better to own: authorized share capital or paid up capital?
The concepts of authorized share capital (how much capital, i.e., how many shares, the company is allowed to issue) and paid up capital (how much the company has issued) are common concepts around the world.You don't actually own the shares until you have paid 'up' for them, although you could hypothetically have a contract that reserves some authorized shares for you to buy in the future, under certain conditions (i.e., options).Your returns come from selling shares, that you can pay for now (shares) or later (options). Options give a better return, under the condition that the contract that underlies them is secure, and honored by the company.When more investment comes in, the paid up capital always changes. The authorized capital may or may not change, depending if the company sells investors authorized but unpaid capital, or if the company has to authorize more capital to issue the shares. Your percentage will change or not accordingly.Most cap tables don't even bother to show authorized stock, since this says nothing about actual ownership. They instead ask for a 'fully diluted' cap table, which includes both paid up stock and options (promised but not issued stock). You would show the paid up equity first, and then the options.
Capital Stock??? What does this mean???
Well I think it would all be greek and latin for person who has no introduction to the basics of Commerce and balance sheet reading. Also even if explained may not be much of value in day to day life. However here it is. Any Company is formed by a group of individuals each contributing certain sums as their contribution of CAPITAL for starting the company and they also get similar contributions from the public at large. There laws governing these so that no bogus company if formed and people run away with the money thus collected.By way of receipts SHARE CERTIFICATES ARE ISSUED The idea is that with initial CAPITAL, assets are acquired and production takes place which when sold earns revenue and make a profit out of which dividends based on the quantum of CAPITAL contributed by each is paid. So CAPITAL STOCK refers to the SHARE CAPITAL of the company Also the company may be formed with an eye for future expansion and so they keep an AUTHORISED SHARE CAPITAL but in practise they may issue for subscription a part of it which is rquired for the first stage of the company. What is actually issued is called ISSUED CAPITAL. Also the facev value of each share may be kept at $1 or $10 or$100 etc. This is called the PAR VALUE or FACE VALUE. If Company does well the Share value may go up as some else may like to buy it from one who wants to sell his shar. If the company riuns at a loss the share value may become less. In the books of the Company these variations would have no impact as it would continue to be shown at PAR VALUE only. The book value per share wouls show whether the Company had added reserves or suffered losses . As I said these are too technical to go into and unless you want to be in accounting job. For general knowledge what I have said should be enough.
I'm in a 50/50 business partnership, but the idea was mine, the capital was mine, and my sweat contribution has been greater. Is this fair?
You are very lucky to have this person. By your own admittance, this very well may have remained a small side business. I read your explanation over several times to get the best sense of what has occurred and concluded that this man has very much been the engine of the business's success. You created the concept, plan, structure and business model. You provided 100% of the capital. While he has been the motor, I am inclined to believe that shouldering the financial burden warrants more equity consideration. YET, it depends on how much start-up capital we're talking about. You said your friend was broke & down and out with bad credit. If he were'nt, would he fairly easily be able to supply his portion of financial equity? There is a difference between funding a startup with $10k versus $100k. Clearly, the latter amount involves significantly more overall risk to your financial health and would clearly warrant you taking more equity (65,35). But, if your small idea required small investment that your partner just couldn't afford at that time but would be relatively easy otherwise, and he more than made up for it in his sweat equity, it appears 50/50 may be fair.As for his health issues, and the business debacle that seemingly sprung from it, how you choose to handle that would seem to be based on your own ethics. You are asking, so, I will say that due to my own principles & morals, it would be exploitative of me to strip a partner of well-earned equity due to a one-time mishap related to health reasons. For me, it would be taking advantage of a moment of weakness of his, and perhaps may even reveal some harbored jealousy and resentment at his greater contribution to the businesses success.Whatever you decide, I strongly urge you two to have the conversation with a lawyer or adviser of sorts present. Lastly, I greatly applaud you for giving someone in need an opportunity to better themselves. I'm sure he feels profound gratitude to you. Highly respectable my friend.
When 2 partners start a business, and only one of them puts in his own capital, how would you decide what percentage each partner gets?
Kyle,There are two types of equity when starting or running a business: 1) cash equity; and 2) sweat equity. Cash equity is the person who is providing the money; and sweat equity is the person providing the labor.Example: If two partners are investing their time equally; and this labor is approximately equal to $50,000 per year; and one of the partners has invested $50,000 cash while the other has invested nothing; the partner investing the cash should own 2/3rds of the business.If one partner invests $50k, and provides no labor, but the other partner is contributing $50k worth of labor, then you may decide to split the company 50% to each partner.The key with sweat equity labor is that you cannot be drawing a paycheck to earn this investment. You have to work for nothing. Otherwise, you are an employee and not an owner. In some cases, you can get paid less than what you are worth. In this case, your sweat equity is the difference between what you are being paid and what you are worth.Hope this helps!
In a business partnership, if one partner invested money and the other invested time, does the partner who invested time have a share in the assets?
To understand this you have to understand the meaning of Partnership. In general people call joint running of any business as partnership. But such businesses are associations and not partnerships unless there is a partnership deed. This deed may be in written form or simply in oral understanding. It depends upon legislations in the country where such business exists.When a firm is registered as a partnership firm, shares of each partners is fixed in the deed itself. In case, there is no deed or shares are not fixed, it is understood that all the partners will share equal assets and liabilities.So as per your question, Yes, even if a partner doesn’t invest capital but is admitted as a partner in the firm, he will get right to assets on liquidation(clossing of the firm). In case such entity is a company, there will be shares attached to him on basis of which he will get right to the portion of assets of the company.However, in case of a Partnership firm (not being a company as confused in question), you can limit the share of such partner in case of dissolution. But for that you must have a partnership deed. Otherwise, such partners will have equal share even on dissolution.
Is it the right time to buy Aditya Birla Capital for the long term?
Sandip who answered earlier seems to have done some fundamental research on Aditya Birla capital . It’s an IPO share and you should get hold of the company Prospectus when the IPO for this stock first came out in early September.I’ll give you my take from a technical view point.The candlesticks are all above the EMA line, indicating that there is a high probability that the stock may continue to rise further.If you’re satisfied from fundamental research that this is a company with a good potential to grow in future, I think you can consider this stock for investment.I’m hesitant to say, however, that it is a good long-term investment ( like 10 - 15 years) .No one can say for sure what’s going to happen in 10 years’ time ( that’s too far ahead to me) but for the shorter term like one year or so, why not.Since this is a new company, don’t place all your hopes on what the Prospectus or even what the company CEO says because things change quickly.Look at this Nasdaq stock Snap . It’s a fairly recent IPO stock listed on March 2017.Ever since its listing, the stock price continued downhill all the way till yesterday. I can draw a nice downward-sloping trendline and the stock price has never pierced the trendline till now.In fact this is a good stock to short sell, NOT buy.I’m trying to tell you that not all IPOs are good till they have proven themselves.So since you asked about long-term investment, my opinion is it’s too soon to take this stock as long term investment.