Candidates’ performance was poor. Majority of the candidates could not express themselves in these questions. The expected explanation from candidates includes:
2(a) A promoter: It is one who undertakes to form and register a company. He gets all the necessary documents, submits them for registration and obtains a certificate of incorporation which entitles a company to commence operations.
(b) Prospectus: This is a document issued by a public limited Liability company inviting the general public to subscribe for shares or debentures of the company.
(c) Underwriting: The is the arrangement whereby someone called the underwriter guarantees to take up the balance of shares offered for sale in the event of the offer being under subscribed. It attracts a commission whether or not the offer is undersubscribed.
(d) Bonus Issue: It is a method of giving out new shares, in place of cash dividends to existing shareholders usually in proportion to the number of shares held. It can be called capitalization issue.
(e) Dividend: It is a part of a net profit of a company which is made available for distribution in cash to shareholders. Dividend is calculated based on nominal value of shares and profit.
