Preference shares

Equity shares

Non-voting equity shares

Company fxed deposits

Warrants

Debentures and Bonds

ypes of Capita! "ar#et $nstruments

%hares that carry preferentia! rights in comparison

&ith ordinary shares

'ights regarding payment of dividend( distribution

of assets of the company in case of its &inding up

ypes)

Cumu!ative and Non-cumu!ative Preference shares

Participating and Non participating Preference

shares

'edeemab!e and $rredeemab!e Preference shares

*u!!y convertib!e cumu!ative Preference shares

Preference shares &ith &arrants attached

Preference shares
*eatures)
+, C!aims on income and assets
-, *ixed dividend
., Cumu!ative dividend
/, 'edemption
0, %in#ing fund
1, Ca!! feature
2, Participation feature
3, Convertibi!ity

Equity shares a!so #no&n as 45rdinary shares6

are the shares he!d by the o&ners of the
corporate entity

Equity shareho!ders face greater ris#s and

!arger share in profts through higher dividends
*eatures)
+, C!aim on income
-, C!aim on assets
., 7oting rights
/, 'ights to contro!
0, Pre-emptive rights
1, 8imited !iabi!ity
Equity 9 5rdinary %hares

o the recommendation of 4:bid ;ussian

Committee6 and amendment to the companies
act( corporate management are permitted to
mobi!i<e additiona! capita! &ithout di!uting the
interest of existing shareho!ders &ith the he!p of
ne& instrument ca!!ed 4Non voting equity
shares6

%uch shares &i!! be entit!ed to a!! the benefts

=dividend( bonus rights and preferentia! o>er of
shares( etc,(?except the right to vote in genera!
meetings

hese shares &i!! carry higher dividend rate than

that of voting shares
Non-voting equity shares

$f a company fai!s to pay dividend( these

shareho!ders &i!! be entit!ed to voting rights
on prorate basis unti! the company resumes
paying dividend

his #ind of share is simi!ar to preference

shares &ith regard to non voting rights but
may get the advantage of higher dividends as
&e!! as appreciation in share va!ues through
entit!ement to bonus shares &hich is not
avai!ab!e in preference shares

*ixed deposit are the attractive source of

short-term capita! both for companies and
investors as &e!!

Corporate favor fxed deposits as an idea!

form of mobi!i<ing &or#ing capita! &ithout
going through the process of mortgaging
assets

$nvestors fnd fxed deposits as a simp!e

avenue for investment in popu!ar companies
at reasonab!e and safe interest rates

$nvestors are re!ieved of the prob!ems of

mar#et va!ue @uctuations and there are no
transfer forma!ities
Company *ixed Deposits

: security issued by the company( granting its

ho!der the right to purchase specifed number of
shares( at a specifed price( any time prior to an
expiry date is #no&n as &arrant

Warrants may be issued &ith either debentures or

equity shares

Warrants in $ndian context are ca!!ed

4%&eeteners6 issued since +AA.

he exercise price of &arrant is usua!!y above the

mar#et price of the shares so as to encourage the
existing shareho!ders to purchase it

5ne &arrant buys one equity share

Warrants

: document that either creates a debt or

ac#no&!edges is #no&n debenture
*eatures)
+, $nterest rate
-, "aturity
., 'edemption
/, $ndenture or debenture trust deed
0, %ecurity
1, Bie!d
2, C!aims on income and assets
Debenture

Participating debentures

Convertib!e debentures

Debt-Equity s&aps

Cero-coupon convertib!e notes

%PN =%ecured premium notes? &ith detachab!e

&arrants

NCD &ith detachab!e equity &arrants

Cero-interest *CD

%ecured <ero-interest PCD &ith detachab!e

and separate!y tradab!e &arrants

*CD &ith interest =optiona!?

*!oating rate bonds

Dinds of Debentures