Capital of a Company - Shares and Debentures

Abstract

The capital played important role during the early development of company law during the industrial evolution. The capital includes share capital which is received when a company issues shares to shareholders as well as the loan capital which the company obtains from issuing debentures to creditors. Capital of a company means cash or goods used to generate income either by investing in a business or a different income property. In other words the money, property and other valuables which collectively represent the wealth of an individual or business are called capital of a company. By shares, we mean units of ownership interest in a corporation or financial asset. Owning shares in a business does not mean that the shareholder has direct control over the business's day-to-day operations. However, being a shareholder does entitle the possessor to an equal distribution in any profits, if any are declared in the form of dividends. Debenture means a type of debt instrument that is not secured by physical asset or security.