Explain the following
(a) Prospectus
(b) Share certificate
(c) Underwriting of shares
(d) Ordinary shares
(e)Dividend warrants.
Explanation
(a)Prospectus:
(i) is an invitation to the public to purchase shares or debentures. It is most often issued by public limited companies.
(ii) A prospectus gives detailed information about the promoters and directors of a particular company.
(iii) The document contains reports by the company's auditors, regarding past profits, losses and dividends declared.
(iv) A prospectus seeks to explain the types of shares available for sale to the members of the public.
(a) Share Certificate: is an evidence of share allotment to a shareholder, it also states the number of shares allotted to its holder and shows the nominal value of each share and the category or class of shares and the rights that accrue to each of them
(c) Underwriting shares: is the undertaking by financial institutions to take part or whole of the share issued if not fully subscribed to by the public. This is a guarantee that shares will be taken up. Most underwriters receive commission and in an event of high demand for shares underwriters resell the unsold shares.
(d) Ordinary shares; can also be called, equity capital. Shareholders under this category are the last to receive dividend. They have a right to managing the company This class of shareholders stands the risk of not getting anything if the company makes little or no profit
(e) Dividend warrant: is a draft issued by a Limited Liability Company and made payable to a shareholder for the amount of dividend owed to him for a stated period. This is always made payable to payee only.