KYAMBOGO UNIVERSITY

SCHOOL OF MANAGEMENT AND ENTREPRENEURSHIP

DEPARTMENT OF ACCOUNTING AND FINANCE

LECTURER’S NAME: MADAM KISEKA LYDIA

COURSE NAME: COMPANY LAW

GROUP NAME: THE GENIUS

NAME REG. NO. SIGN

KYONAMUSA IBRAHIM 21/U/AFD/4397/PD

SSENTONGO SHABAN 21/U/AFD/8719/PD

WATSEMBA HILLARY 21/UAFD/9338/PD

NABUKALU PAULINE 21/U/AFD/5799/PD

NAIRUBA BETTY 21/U/AFD/5979/PD

AGABA ODETAH 21/U/AFE/0637/PE

IDYEDO VERONICA ERISU 21/U/AFD/3039/PD

NYAROKECH GODSWIL 21/U/AFD/7618/PD

NATASHA
KEITESI BRIDGET 21/U/AFD/3792/PD

9(a).Discuss the difference between share certificate and a share warranty

b. Examine the different ways in which a company can raise capital.

a. A share certificate is a written document prepared by the company under its common seal to the
members containing a number of shares held by each member and the amount paid to them.
Section 92 states that a share certificate is a prima facie evidence of the members to the
shares.
Section 91 provides for the issuance of share certificates within 60 days after the allotment.
On the other hand,
 A share warrant is an instrument which signifies that the holder of the instrument is entitled
to the share mentioned in it.
Section 95 authorizes the company limited by shares to issue a warrant in respect to fully
paid up shares. It shows that the holder is the owner of the stated number of shares.

The following are the differences;

Share certificate is to be issued by both the public and private company while a share warranty can only
be issued by a public company.

A share certificate can be issued both for fully paid or partially paid up shares but for a share warranty
can be issued only in respect of fully paid up shares.

A share certificate can be issued without prior approval of the central gov’t while a share warranty can
be issued only with the approval of the central gov’t.

A share certificate can be originally issued but a share warranty cannot be issued originally.

A share certificate is the documentary evidence which proves the possession of shares but for the share
warranty is the document of title which states that the holder is entitled to the shares.

A share certificate is compulsory for every company limited by shares but the issue of share warranty is
not compulsory for every company.

A share certificate is not a negotiable instrument while a share warranty is a negotiable instrument.

A share certificate is to be issued within three months of the allotment of shares, but there is no such
time limit specified in the companies act for the issue of share warranty

9(b). Examine the different ways in which a company can raise capital.

Capital is the network of the business. The types of capital are;

Share capital: is capital contributed by members. Share capital can be inform of nominal, paid up,
reserve issued capital among others.

i. Nominal capital: is the authorized proxy amount of share capital that can be
realized before registration of a company
ii. Issued capital: is the nominal value of the shares available for subscription and has
been allotted.
iii. Called up capital: is the portion of issued capital that a company has requested for
settlement from holders of shares that have not been fully paid for.
iv. Reserve capital: a portion of issued capital which is at call but it is not called up
except in the event of wining up.

The following are the different ways a company can raise capital;
By floating shares for sale. This is where the company sells off its available shares to the public. There
are a number of mechanisms by which this can be effective;

Rights issue. Here, the corporation makes the ordinary shareholders to buy new shares at a price lower
than that in the stock exchange.

Placing. A company issues securities in the issuing house for the purpose of later selling clients.

Offer by tender. A company rise to the public for the purchase of its shares.

Offer for sale. A corporate company sets issue of shares to issuing house and the house bears the risks
of sharing the shares to others.

Direct issuing. This is where the company markets to the general public to purchase its shares.

By borrowing. The company gets money from financial institutions like banks, microfinance among
others.

By ploughing back the profits: this is where the company gains profits and puts them back in the
company business.

From friends and families; they can offer funds to the company. For example family can provide land to
the company.

Government grants; gov’t may grant funds to the company to assist in raising capital for its operations
for its growth.

Investors; this is where external people come in to assist and invest in the company with an aim of
making profits.

Personal capital; this is where the company owner uses capital from his other sources like, insurance
policy, mutual funds, savings among others.

Selling bonds; bond is a written promise to pay back the specified amount of money at a certain date in
future. Bonds are advantageous due to low interest rates which are also considered a tax deductible
business expense. Holders can sell bonds to someone else before they’re due. So, this is a way a
company can raise capital.

 Reference; account learning.com.