Capital is the aggregate of funds used to generate a profit. The very concept of "capital" includes not only funds in the form of cash, but also securities, labor resources, copyrights, buildings, cars, and so on. There are several forms and types of it. Equity capital is one of the varieties of capital.
The share capital is the sum of values, both tangible and intangible, contributed by shareholders in order to organize the assets of the enterprise. Each of the shareholders owns a certain share in the capital and receives dividends accrued on it. If the company is liquidated, the shareholder has the right to receive part of the property.
In addition to cash and securities, participation in the share capital of an enterprise can also be expressed in the form of premises, production technology of any product or equipment.
It is possible to increase the share capital by increasing the number of shareholders, by transferring dividends or by increasing the shares of existing shareholders of the enterprise.
Mutual investment funds
Usually, such a concept as share capital is used in mutual funds, which accumulate funds invested by investors to generate income. In a situation with such funds, the purchase or sale of a share occurs according to a rather simple scheme, in the case of large enterprises, this is a significant big event.
The possibility of purchasing or increasing a share in a bank's authorized capital or a large organization is considered by the board of directors of this enterprise. To acquire a share in a mutual investment fund, an investor is not required to have a large amount of money, since the value of a share can be in the range of several thousand rubles. If it is necessary to replenish the share capital, additional funds are attracted through the issue of shares, government assistance, targeted financing and other sources.
Scope of share capital
Equity capital is used to assess the efficiency of an enterprise. Its increase with a constant profit indicator is evidence of mistakes and incorrect work of the company, and this, in turn, will entail the collapse of the enterprise.
In addition, the share capital can be used to create insurance companies or credit unions. In the first case, he acts as a guarantor of insurance payments when an appropriate situation occurs. In the credit union, it is the so-called "mutual assistance fund", the funds of which the shareholders can use to solve their monetary problems.
No matter how the share capital is used, the rules for working with it should be described in sufficient detail in the statutory documents and regulated by orders and other documents of the enterprise.
