List six activities which would result in the change of capital structure for a company

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Expert Solution

Activities that will result in change of capital structure:

1. Issue of Bonus shares - Bonus will result in increase in share capital of the company

2. Redemption of Debentures or Preference shares - Redemption of debentures will reduce debt portion in capital structure of the company. Redemption of preference share results in reduction of share capital

3. Conversion of convertible debentures - sometimes company issues convertible debentures. On conversion of debentures into equity shares, debt capital of the company reduces and equity capital increases.

4. Internal reconstruction - Reconstruction causes reduction in claim of shareholders and debenture holders which ultimately results in change in capital structure

5. Buyback of shares - This are various reasons due to which decides to buy back own shares . Buyback results in reduction of share capital

6. Issue of fresh capital - Company can raise capital by issuing new shares to investors which will result in increase in share capital

jeff jeffy answered 1 year ago

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