account solution class 12 issue of shares
Answers
Share issue is the process by which companies pass on new shares to shareholders, who may themselves be new or existing shareholders. Companies can issue shares to both individuals or corporate bodies, and in another article we look in more detail at the step by step process to issue shares. Alongside the issue of shares, you may see the term ‘share allotment’ used. While there can be subtle differences between issuing shares and allotting them, for most companies and in most circumstances they amount to exactly the same process. So we’ll use both terms to mean the same thing here.
We must, however, distinguish between a share allotment and a share transfer. With a share allotment, the shares are created and issued by the company to the people who become the company’s shareholders. Shares will generally be issued by the company at the start of its life and some companies will issue more shares later on. A share transfer, in contrast, involves existing shares being passed from an existing shareholder to someone else. That will always take place after the company has been formed and, although the company may be involved, it is not creating or allotting those shares.
