RTA Mutual Fund Exam Important Points

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  • Equity capital entitles its contributors to participate in the residual profits of the company.
  • Equity shares are first issued by a company to the public through a process called the Initial Public Office (IPO).
  • After IPO, the shares are listed on the stock exchanges, where they can be traded between investors. This is called the secondary market.
  • Equity capital is for perpetuity. It cannot be redeemed and the company does not have an obligation to repay it. buy-back its own shares from the investors. Such shares shall be extinguished by the company.
  • Convertible debentures pay interest like any other debt instrument till the date of maturity. On maturity, the debt is converted into equity shares. The terms of conversion, such as the number of equity shares that each debenture will be converted into and the price at which the conversion will take place are mentioned at the time of the issue of the debt instrument.