CONTROLLING Issue of Shares and · PDF file- Controlling - Prof. Dr. Carsten ... FI.ppt 165. 3 Source: University of Applied Sciences ... Each voting share carries one vote at general

page: 1

- Controlling -

Prof. Dr. Carsten BerkauProf. Dr. Carsten Berkau

FI.ppt

165.165.11Source:

University of Applied Sciences

© Prof Dr Carsten Berkau, 2008

This slide can be accessed at my website: www.Prof-Berkau.de;

use: FHOSStudent (Remarque)

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IFRS 2006

IssueIssue of Shares and of Shares and DebenturesDebenturesbyby


FI.ppt

165.165.33Source:





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IFRS 2006

KarmannKarmann

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165.165.1414Source:





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IFRS 2006

to to thethe lessonlesson ......

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165.165.1515Source:





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IFRS 2006

StructureStructure

InternationalFinancialReporting

Standards(IFRS)

Int. Financial Accouting

SUNNY AG HPG GmbH McToy AG

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165.165.1717Source:





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IFRS 2006

EquityEquity

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165.165.1818Source:





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IFRS 2006

Legal Legal FormsForms of an of an OrganizationOrganization

Thomas, A.: Introduction to Financial Accounting. 5th edition. London et al.

(McGraw-Hill): 2005, pg. 362.

There are several different legal forms of organization. However, these can be all grouped into two categories, known as bodies sole (sole traders, partnerships) and bodies corporate. A key feature of bodies corporate (= incorporate bodies) is that they are recognized by law as being a legal entity separate from their members.

There are four types of company:

(1) Companies whose liability is limited by sharesA Public limited company (plc) must be registered as such. The principal reason for forming a public limited company is to gain access to greater amounts of capital from investment institutions and members of the public. All other limited companies are private companies. These are not allowed to offer their shares for sale to the general public and thus do not have stock exchange quotations. Forming a private company enables the owners to keep control of the business.

(2) Companies with unlimited liability

(3) Companies whose liability is limited by guarantee

(4) Companies whose liability is limited by shares and guarantee.

page: 4

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FI.ppt

165.165.1919Source:





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IFRS 2006

CharacteristicsCharacteristics of of CompaniesCompanies LimitedLimited byby SharesShares

Thomas, A.: Introduction to Financial Accounting. 5th edition. London et al.

(McGraw-Hill): 2005, pg. 362.

(1) A company is a legal entity separated from its shareholders (= owners). This means that companies enter into contracts as legal entities in their own right. Thus, creditors and others cannot sue the shareholders of the company but must take legal proceedings against the company.

(2) A company has a perpetual existence.

(3) The liabilitity of a company‘s shareholders is limited to the normal value or their shares. Limited liability means that if a company‘s assets are insufficient to pay its debts the shareholders cannot be called upon to contribute more than the nominal value or their shares towards paying those debts.

(4) The shareholders of a company do not have the right to take part in its management as such.

(5) Each voting share carries one vote at general meetings of the company‘s shareholders

(6) A limited company must have at least two shareholders.

FI.ppt

165.165.2020Source:





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IFRS 2006

Capital Capital StructureStructure ((GearingGearing, , LeverageLeverage))

compare with: Whiteley, J.: Mastering

Financial Management. Houndsmills

(Palgrave): 2004, page 182.

Capital structure refers to the relationship between equity capital and loan capital. Gearing is a key measure of a company‘s financial structure, referring to the relative proportions of equity capital and loan capital.

If the proportion of loan capital to equity is high, the company is said to be high geared. Generally, the dividing line between high and low gears companies can be taken as 50%.

Example Sunny AG (20X5):

The gearing is the loan capital(3,823,588.00 EUR) expressedas a percentage of the totalcapital (5,509,930.00 EUR). This

works out as 69.4%, and is high

geared.

SUNNY AG's

A B/S as at 31 Dec 20X5 C,L

N-cur Assets [EUR] SH's capital [EUR]

P,P,E 2.357.000 Issued capital 600.000

Int, assets Reserves 1.085.342

Fin, assets Retained ear. 0

cur Assets Liabili ties

Inventory Int. bear. liab. 271.078

Receivables 1.098.960 Payables 3.289.006

Prepaid exp. Provisions

Cash 2.052.970 Def. income

Tax liabilities 263.504

5.508.930 5.508.930

simplified B/S

page: 5

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165.165.2121Source:





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IFRS 2006

Sunny Sunny AG‘sAG‘s equity as at End of 20X5equity as at End of 20X5

SUNNY AG's






cur Assets Liabilities






5.508.930 5.508.930

simplified B/S

Berkau, C.: Bilanzen. Stuttgart (UTB): 2008.

FI.ppt

165.165.2222Source:





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IFRS 2006

IDS Scheer AG (Group Statement), IDS Scheer AG (Group Statement), SaarbrueckenSaarbruecken 20052005

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165.165.2323Source:





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IFRS 2006

IDS Scheer AG (Group Statement), IDS Scheer AG (Group Statement), SaarbrueckenSaarbruecken 20052005

Total of loan capital: 122,216,000.00 EUR

Total capital: 307,995,000.00 EUR

.: Gearing 39,68%

IDS Scheer AG is low geared. Guess why?

FI.ppt

165.165.2424Source:





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IFRS 2006

Capital Capital StructureStructure

compare with: Whiteley, J.: Mastering Financial Management. Houndsmills

(Palgrave): 2004, page 183.

The structure of a company‘s capital is the devision between the shareholders, who are the members of the company, and the lenders, who are creditors of the company.

Interest paid on loan capital is deductable from the company‘s profit for

tax purposes, whereas dividend payments are not. They have to be paid out of profits.

page: 7

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165.165.2525Source:





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IFRS 2006

IAS 1.68 and 1.71IAS 1.68 and 1.71

1.68 As a minimum, the face of the balance sheet shall include line items that present

the following amounts to the extent that they are not presented in accordance

with paragraph 68A:

(a) property, plant, and equipment

(b) investment property

(c) intangible assets

(d) financial assets [...]

(e) investments accounted for using the equity method

(f) biological assets

(g) inventories

(h) trade and other receivables

(i) cash and cash equivalents

(j) trade and other payables

(k) provisions

(l) financial liabilities [...]

(m) liabilities and assets for current tax, as defined in IAS 12

(n) deferred tax liabilities and deferred tax assets,

(o) minority interest, presented within equity

(p) issued capital and reserves attributable to equity holders of the parent

1.71 This standard does not prescribe the order or format in which items are to be

presented. Paragraph 68 simply provides a list of items [...]

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IFRS 2006

B/S B/S alongalong IAS 1IAS 1

Homepage Company's balance sheet

as at 31 Dec 20X4 20X3

non-current assets [EUR] [EUR]

property, plant and equipment 102.712,40 91.091,72

investment property 0,00 0,00

intangible assets 40.000,00 0,00

financial assets 2.800,00 2.800,00

investment accounted [...] 0,00 0,00

total of non-current assets 145.512,40 93.891,72

current assets

inventories 23.475,00 900,00

trade and other receivables 422.400,00 415.200,00

cash and cash equivalents 120.989,04 40.612,00

prepaid expenses 1.000,00 1.000,00

total of current assets 567.864,04 457.712,00

Total assets 713.376,44 551.603,72

liabilities

[...] interest bearing liabilities 75.000,00 60.000,00

trade and other payables 187.958,61 125.696,55

provisions 18.782,87 0,00

liabilities and assets [...] IAS 12 61.662,28 126.322,96

deferred tax liabilities [...] IAS 12 14.154,71 344,15

deferred income 8.620,69 8.620,69

total of liabilities 366.179,16 320.984,35

Capital

issued capital 40.000,00 40.000,00

other reserves 193.619,37 9.283,25

retained earnings 113.577,91 181.336,12

total of shareholder's equity 347.197,28 230.619,37

Total equity and liabilities 713.376,44 551.603,72

page: 8

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165.165.2727Source:





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IFRS 2006

B/S B/S alongalong IAS 1 (IAS 1 (greatergreater))

Capital

issued capital 40.000,00 40.000,00

other reserves 193.619,37 9.283,25

retained earnings 113.577,91 181.336,12

total of shareholder's equity 347.197,28 230.619,37

Total equity and liabilities 713.376,44 551.603,72

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165.165.2828Source:





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IFRS 2006

SCESCE alongalong IAS 1IAS 1

subscribed

capital

revaluation

reserves

profit cumulated shareholder's

equity

as at Dec 20X2 40.000,00 9.283,25 49.283,25

profit (income statement 20X3) 181.336,12 181.336,12

as at Dec 20X3 40.000,00 190.619,37 230.619,37

revaluation (car) 3.000,00 3.000,00

profit (income statement 20X4) 113.577,91 113.577,91

as at Dec 20X4 40.000,00 3.000,00 304.197,28 347.197,28

page: 9

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165.165.2929Source:





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IFRS 2006

Major Major InternalInternal SourcesSources of of FinanceFinance

McLaney, E.; Atrill, P.: Accounting. 3rd edition. Harlow et al. (Prentice Hall):

2005, pg. 516.

TotalInternal Finance

Short-term

RetainedProfit

Long-term

ReducedStockLevels

DelayedPayments to

Creditors

TighterCredit

Control

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165.165.3131Source:





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IFRS 2006

Major Major SourcesSources of of ExternalExternal FinanceFinance


2005, pg. 519.

Long-term

OrdinaryShares

PreferenceShares

Loans/Debentures

Leases

Short-

termShort-term

BankOverdraft

Debt

Factoring

Invoice

Discounting

page: 10

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165.165.3232Source:





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IFRS 2006

RiskRisk and and RatingsRatings

Lenders have a prior claim on the assets of the company, and to that extent, their risk is lower than shareholder‘s risk. However, there is always a certain degree of risk inherent in investing money in a company, in whatever form.

Independent credit-rating agencies, such as Moody‘s or Standard and Poor, make assessments of the risk categories of loan capital ofcompanies.

Their categorizations follow similar lines to each other – from AAA (S&P) or Aaa (Moody‘s) to C (both companies). The triple A rating indicates the lowest risk, and the C rating indicates the highest risk. In this context the risk being assessed is the risk of interest payments not being made, and the repayment or the capital being defaulted on. The common name given to the lower risk grades is „Junk Bonds“.

In order to compensate for the degree of risk, the interest rate offered on higher risk loans is generally higher than that offered on the least risky loans.


(Palgrave): 2004, page 184f.

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165.165.3333Source:





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IFRS 2006

Share CapitalShare Capital


(Palgrave): 2004, page 194 and Faul, M.A.; Everingham, G.K.; Lomax, A.C.:

Financial Accounting. 5th edition, pg. 446.

Ordinary Shares

The ordinary shares represent the investment in the business of people who are willing to take commercial risks. The liability of shareholders for company debts is limited to

the amount they have invested in the company. Ordinary shareholders form the bulk of the membership of the company, and they control the company by their votes. The management of the company is delegated to directors, who are answerable to the shareholders. Ordinary shareholders can only receive dividends out of the profits left

after the prior claims of other investors (loan creditors, preference shareholders)

have been met.

Preference Shares

They have a prior claim on the profits and assets (liquidation) of the company, but no voting rights unless cumulative dividends are in arrears. They rank before ordinary

shares in paying dividends, and in the distribution of assets in the case of the winding up of the company. Typically, preference shares carry the right to a fixed dividend, which is usually cumulative. (1) Participating preference shares give shareholders the right to participate in the variable dividend paid to ordinary shareholders after their fixed dividend has been paid. (2) Redeemable preference shares have a fixed repayment date. (3) Convertible shares carry the right to convert into ordinary shares.

Deferred shares

They rank after ordinary shares in the pecking order. (high risk) They will therefore only receive their dividends, or capital repayments on liquidation after the claims of the ordinary shareholders are met.

page: 11

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165.165.3434Source:





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IFRS 2006

QuestionQuestion


2005, pg. 520

Would you expect the returns to preference shares to be higher or lower

than of ordinary shares

FI.ppt

165.165.3636Source:





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IFRS 2006

QuestionQuestion


2005, pg. 521

Would you expect the market price of ordinary shares or preference

shares to be the more volatile?

page: 12

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FI.ppt

165.165.3838Source:





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IFRS 2006

CaseCase StudyStudy Sunny AG Sunny AG beforebefore AppropriationAppropriation of Profitof Profit

SUNNY AG's




Int, assets Reserves 868.040

Fin, assets Retained ear. 413.908




Perpaid exp. Provisions


Tax liabilities 263.5045.508.930 5.508.930

simplified B/S


FI.ppt

165.165.3939Source:





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IFRS 2006

DividendDividend

Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape

Town (Lebone) 2005.

Dividends are a distribution of profits from the company to shareholders in the same ratio in which shares are held.

Dividend may only be paid from profits which are legally available for

distribution. The company should be financed sound and have adequate cash resources to pay the dividends.

The directors of a company normally propose the dividend, which is then approved by a general meeting of shareholders. It is usual not to distribute all the profits by way of dividend. A proportion of the profits is normally retained in the company for future growth.

A dividend is only due and payable once it has been declared by the company. The liability for the payment of the dividend is therefore raised in the books of the company on the declaration date.

The shareholders to whom dividends are paid are established by identifying a date on which share registers are closed. All shareholders registered on the date of the closing of registers will receive a dividend.

page: 13

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165.165.4040Source:





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IFRS 2006

Dividend Example (2007)Dividend Example (2007)

Kieso, D.E.; Weygandt, J.J.; Warfield, T.D.: Intermediate Accounting. 12th edition. Wiley 2007.

Seattle’s Plum Creek Timber pays a dividend of close to 4.2 percent, and it also expects earnings to expand about 6 percent in the next year.

General Motors has a seemingly healthy dividend of 5.8 percent. But the big car manufacturer has a loss of $1.1 billion in a recent quarter, and it is having trouble reducing its onerous health care benefits. There is concern that GM may be forced to trim its dividend at some point to conserve cash.

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165.165.4141Source:





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IFRS 2006

Distribution of ProfitDistribution of Profit

At time of incorporation (1.01.20X1) Sunny AG issued 120,000 ordinary shares par value 5.00 EUR/share.

During fiscal years 20X1 ... 20X5 Sunny AG paid a dividend to

shareholders 50% of profit attributable to shareholders. (§ 150 German AktG considered)

Dividends were paid at the beginning of the following fiscal year to ordinary shareholders.

20X1 20X2 20X3 20X4 20X5

add to legal Earn.Res 20.652,27 20.662,08 20.672,52 20.683,61 20.695,40

add to other earn res 196.196,56 196.289,81 196.388,93 196.494,30 196.606,31

Dividend 196.196,56 196.289,81 196.388,93 196.494,30 196.606,31

20X1 20X2 20X3 20X4 20X5

add to legal Earn.Res 20.652,27 20.662,08 20.672,52 20.683,61 20.695,40

add to other earn res 196.196,56 196.289,81 196.388,93 196.494,30 196.606,31

Dividend 196.196,56 196.289,81 196.388,93 196.494,30 196.606,31


page: 14

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165.165.4242Source:





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IFRS 2006

CaseCase StudyStudy Sunny AG Sunny AG afterafter AppropriationAppropriation of Profitof Profit

SUNNY AG's











Tax liabilities 263.5045.508.930 5.508.930

simplified B/S


FI.ppt

165.165.4444Source:





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based on:

IFRS 2006

SCESCE afterafter AppropriationAppropriation of Profitof Profit

subscribed

capital

Capital Reserves leg. Reserves Reserves

cumulated

shareholder's

equityas at Dec 20X0 600.000,00 0,00 0,00 600.000,00

as at Dec 20X1

Profit 20.652,27 196.196,56 600.000,00 20.652,27 196.196,56 816.848,82

as at Dec 20X2Profit 20.662,08 196.289,81

600.000,00 41.314,35 392.486,36 1.033.800,72

as at Dec 20X3

Profit 20.672,52 196.388,93 600.000,00 61.986,87 588.875,29 1.250.862,17

as at Dec 20X4

Profit 20.683,61 196.494,30 600.000,00 82.670,48 785.369,60 1.468.040,08

as at Dec 20X5Profit 20.695,40 196.606,31

600.000,00 103.365,89 981.975,91 1.685.341,80

subscribed

capital


cumulated

shareholder's

equityas at Dec 20X0 600.000,00 0,00 0,00 600.000,00

as at Dec 20X1

Profit 20.652,27 196.196,56 600.000,00 20.652,27 196.196,56 816.848,82

as at Dec 20X2Profit 20.662,08 196.289,81

600.000,00 41.314,35 392.486,36 1.033.800,72

as at Dec 20X3

Profit 20.672,52 196.388,93 600.000,00 61.986,87 588.875,29 1.250.862,17

as at Dec 20X4

Profit 20.683,61 196.494,30 600.000,00 82.670,48 785.369,60 1.468.040,08

as at Dec 20X5Profit 20.695,40 196.606,31

600.000,00 103.365,89 981.975,91 1.685.341,80


page: 15

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165.165.4545Source:





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IFRS 2006

IssueIssue of Sharesof Shares

FI.ppt

165.165.4646Source:





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IFRS 2006

IssueIssue of of OrdinaryOrdinary Shares Shares

Sunny AG issues on 31.12.20X5 24,000 ordinary shares by rights. It offers to their shareholders 1 share for 5 shares hold. The Fair Market Value (FMV) for the Sunny AG share is at moment of issuing 14.50 EUR. The new shares have got a selling price 12.80 EUR. Face value or the new shares is 5.00 EUR.

The booking entries for that issue are:

DR Cash 307,200.00 EUR

CR Share Capital 120,000.00 EUR

CR Share Premium 187,200.00 EUR

SUNNY AG's






cur Assets Liabili ties






5.816.130 5.816.130

simplified B/S


page: 16

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FI.ppt

165.165.4747Source:





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IFRS 2006

Sunny Sunny AG‘sAG‘s SCESCE

subscribed

capital


cumulated

shareholder's

equityas at Dec 20X0 600.000,00 0,00 0,00 600.000,00

as at Dec 20X1Profit 20.652,27 196.196,56 216.848,82

600.000,00 20.652,27 196.196,56 816.848,82

as at Dec 20X2Profit 20.662,08 196.289,81 216.951,89

600.000,00 41.314,35 392.486,36 1.033.800,72

as at Dec 20X3Profit 20.672,52 196.388,93 217.061,45

600.000,00 61.986,87 588.875,29 1.250.862,17

as at Dec 20X4Profit 20.683,61 196.494,30 217.177,92

600.000,00 82.670,48 785.369,60 1.468.040,08

as at Dec 20X5Issue of Shares 120.000,00 187.200,00 307.200,00

Profit 20.695,40 196.606,31 217.301,72

720.000,00 187.200,00 103.365,89 981.975,91 1.992.541,80


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165.165.4949Source:





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IFRS 2006

Exercise Issue of SharesExercise Issue of Shares

A company has share capital 5 million EUR split up to 100,000 shares. Fair market

value is 340.00 EUR/share. The board of directors issues 20,000 new ordinary shares with a price 100.00 EUR/share. The par value of the new shares is 50.00 EUR/share.

(1) Compute the ex-right value

(2) Compute the value of the right

(3) Determine the value of share capital and capital reserves.

(4) Compute the value of the shareholder holding 10 shares (a) before issue, (b) after issue when he/she sells the right (c) after issue using the rights to

by new shares.

page: 17

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165.165.5050Source:





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IFRS 2006

Different Different WaysWays to to IssueIssue SharesShares

Issue Price and Share Premiums

Shares may be issued at their face value. However, shares may be issued at a premium. The shareholders pays more than the nominal value of the shares. The company must account for that premium.

Public offers

The mechanism is that the company makes an offer of sale of its shares by advertisement, and publication of a prospectus. This sets out the details of the shares on offer and other relevant details of the company‘s finance.

Underwriting

This means than an exterior organization, either stockbroakers or merchant bankers act as the issuing house. They guarantee to buy any shares not taken up by the general public or the existing shareholders.

Issue by tender

The public is invited to make bids to offer to buy a specified number of shares at a price which the buyer offers. When the deadline for bids has passed the company works out the striking price. All offers at or above the striking price will be accepted at the striking price.

Rights issue

Only shareholders get the right to buy new shares or can sell these rights.

Script issue, capitalization shares (bonus issue)Issue of free fresh shares to existing shareholders to make shares more marketable.

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IFRS 2006

Disclosure of Equity on the Face of the B/SDisclosure of Equity on the Face of the B/S

CAPITAL EMPLOYED

ORDINARY SHARE CAPITAL 180.000

- 180,000 Ordinary shares at R1.00 each

SHARE PREMIUM ACCOUNT 12.000

NON DISTRIBUTABLE RESERVES 60.000

- Reserve arising on revaluation 35.000

- Surplus on sale of land and building 25.000

DISTRIBUTABLE RESERVES

- Returned income 146.000

ORDINARY SH's INTEREST 398.000

PREFERENCE SHARE CAPITAL

- 60,000 12% Preference shares at R1.00 each 60.000

SHARE CAPITAL AND RESERVES 458.000

LONG TERM LIABILITIES 32.000

- 320 14% Mortgage debentures at R100.00 each32.000

less: Short term portion (8.000)

24.000

- Other unsecured loans 8.000

490.000

Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape

Town (Lebone) 2005.

page: 18

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165.165.5252Source:





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IFRS 2006

Authorized SharesAuthorized Shares

Faul, M.A.; Everingham, G.K.; Lomax, A.C.: Financial Accounting. 5th edition,

Durban (Butterworths): 1999, pg. 106.

A distinction is made between the authorized share capital, being shares which a company may issue in terms of its articles, and the issued share capital, representing the number of shares which a company has actuallyissued.

A company has to report on its authorized share capital in the notes.

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165.165.5353Source:





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IFRS 2006

Stock Right (Warrant)Stock Right (Warrant)

Kieso, D.E.; Weygandt, J.J.; Warfield, T.D.: Intermediate Accounting. 12thedition. Wiley 2007, pg. 727.

Every share carries the right to share proportionately in any new issues of

stock of the same class – called the preemtive right (= stock right, “warrant”).

The stock right is used to protect each stockholder‘s proportional interest in the company. The preemptive right protects an existing stockholder from involuntary dilution of ownership interest. Without his right, stockholders might find their interest reduced by the issuance of additional stockwithout their knowledge, and at prices unfavorable to them.

(In case all shareholders take the offer to buy shares for rights they have received, the voting structure does not change.)

However, many corporations have eliminated the preemtive right, because this right makes it inconvenient for corporations to issue lageamounts of additional stock, as they frequently do in acquiring other companies.

page: 19

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IFRS 2006

QuestionQuestion 11

see: Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape Town

(Lebone) 2005, 20-8

LERATO Ltd. was formed with an authorized share capital of:

100,000 ordinary shares of R1.50 each 150,000.00 50,000 8% preference share (no par value)all shares are issued for cash.

Required: Record the journal entries for the issue of the shares under each of the sets of conditions. Draft the balance sheet of LERATO Ltd. in each case after the shares issue to comply with the minimum disclosure requirements of the Companies Act and GAAP.

Case 1: Issue of par value shares at parThe founders of the company (also called subscribers to the memorandum) subscribe and pay for 30,000 ordinary shares at par. The

other 70,000 ordinary shareholders are offered to the public at par. Applications are received for 70,000 shares and these shares areallotted.

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TaskTask 11


(Lebone) 2005, 20-8



Required: Record the journal entries for the issue of the shares under each of the sets of conditions. Draft the balance sheet of LERATO Ltd. in each case after the shares issue to comply with the minimum disclosure requirements of the Companies Act and GAAP.

Case 1: Issue of par value shares at parThe founders of the company (also called subscribers to the memorandum) subscribe and pay for 30,000 ordinary shares at par. The

other 70,000 ordinary shareholders are offered to the public at par. Applications are received for 70,000 shares and these shares areallotted.

page: 20

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IFRS 2006

QuestionQuestion 11


(Lebone) 2005, 20-8



Required: Record the journal entries for the issue of the shares under each of the sets of conditions. Draft the balance sheet of LETATO Ltd. in each case after the shares issue to comply with the minimum disclosure requirements of the Companies Act and GAAP.

Case 2: Issue of par value shares at a premium – issue oversubscribedThe founders of the company subscribed and paid for 40,000 ordinary shares at par. A further 60,000 ordinary shares were offered six month

later to the public at a premium of 50c per share. Applications and payments were received for 60,000 shares. The 40,000 shares wereallotted and all unsuccessful applicants were refunded.

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IFRS 2006

TaskTask 11


(Lebone) 2005, 20-8




Case 2: Issue of par value shares at a premium – issue oversubscribedThe founders of the company subscribed and paid for 40,000 ordinary shares at par. A further 50,000 ordinary shares were offered six month

later to the public at a premium of R1.00 per share. Applications and payments were received for 60,000 shares. The 40,000 shares wereallotted and all unsuccessful applicants were refunded.

page: 21

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IFRS 2006

QuestionQuestion 11


(Lebone) 2005, 20-8




Case 3: Issue of no par value shares – issue under subscriptionThe founders of the company subscribe and pay for 20,000 ordinary shares at par. Six month later the public is offered 50,000 ordinary

shares at a premium of 25c and 50,000 8% preference shares of no par value at 50c per share. Subscriptions are received for 30,000 ordinary shares and 50,000 8% preference shares and all shares are allotted. Share issue expense of R5,000.00 were incurred and written off against the share premium account.

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IFRS 2006

TaskTask 11


(Lebone) 2005, 20-8




Case 3: Issue of no par value shares – issue under subscriptionThe founders of the company subscribe and pay for 20,000 ordinary shares at par. Six month later the public is offered 50,000 ordinary

shares at a premium of 50c and 50,000 8% preference shares of no par value at 50c per share. Subscriptions are received for 10,000 ordinary shares and 50,000 8% preference shares and all shares are allotted. Share issue expense of R5,000.00 were incurred and written off against the share premium account.

page: 22

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IFRS 2006

Stated Capital AccountStated Capital Account

Shares can be issued par value or no par value shares (NPV). Par value means there is a face value for each share as its nominal value and the product of face value and amount of shares issued equals the share capital to be recognized in the B/S.

To distinguish on the B/S whether shares are par value or no par value, the term “Share Capital” is used for par value shares and the term “Stated Capital” is used for no par value shares.

par value share:

Share capital 50.000

50,000 Ordinary shares of R1.00 each)

no par value shares

Stated capital

50,000 Ordinary shares 60.000

(No nominal value has been given to each share)

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ConversionConversion of Par Value Shares to No Par Value Sharesof Par Value Shares to No Par Value Shares

The company can convert par value shares plus the share premium to

the stated capital account. This is related to all ordinary and/or all preference shares.

In the other direction no par value shares can be converted to par value shares. In that case there is no share premium account to be credited.

Share Cap(R100,000)

Share Prem.(R20,000)

Stated Capital(R120,000)

par valueno par value

Share Cap(R120,000)

par value

page: 23

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IFRS 2006

QuestionQuestion 22

see: Flynn, D.; Koornhof, C.:

Fundamental Accounting. 5th edition.

Cape Town (Lebone) 2005, 20-8

BETA Ltd. has the following balances in their records as at 31.12.20X2 – DR(CR)

Additional information not recorded in the T/B:

(1) At a meeting of the directors held on 30.06.20X2 it was decided: (a) to issue a further 50,000 ordinary shares to the public at a premium of 50c per share on

31.08.20X2. Share issue expense amounted to R 6,000.00. ABLE UNDERWRITERS

Ltd. underwrote the entire issue for a commission of 5%. Applications were

received for 40,000 shares. (b) To convert the authorized and issued ordinary share capital to no par value shares with effect from 30.09.20X2. Only the ordinary share

premium should be transferred to the stated capital account.

(2) On 1.06.20X2, at the annual general meeting, the directors were given a general

authority to issue the unissued shares of the company until the next annual

meeting.(3) Share premium expense are written off to profits.

(4) The authorized share capital consists of 150,000 ordinary shares of R 2.00 each

and 50,000 8% redeemable preference shares of R 1.00 each.

Ordinary Shares (50,000 of R2.00) (100.000)

Share premium - ordinary shares (12.000)

Share premium - preference shares (8.000)

Retained income (50.000)

Preference Shares (30,000 of R 1.00) (30.000)

Non-current assets 120.000

Net current assets 70.000

Share issue expenses 10.000

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IFRS 2006

TaskTask 22

see: Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape Town (Lebone)

2005, 20-8

BETA Ltd. has the following balances in their records as at 31.12.20X2 – DR(CR)

Additional information not recorded in the T/B:

(1) At a meeting of the directors held on 30.06.20X2 it was decided: (a) to issue a further 100,000 ordinary shares to the public at a premium of 50c per share on

31.08.20X2. Share issue expense amounted to R 6,000.00. ABLE UNDERWRITERS

Ltd. underwrote the entire issue for a commission of 5%. Applications were

received for 70,000 shares. (b) To convert the authorized and issued ordinary share capital to no par value shares with effect from 30.09.20X2. Only the ordinary share

premium should be transferred to the stated capital account.

(2) On 1.06.20X2, at the annual general meeting, the directors were given a general

authority to issue the unissued shares of the company until the next annual

meeting.(3) Share premium expense are written off to profits.

(4) The authorized share capital consists of 150,000 ordinary shares of R 2.00 each

and 50,000 8% redeemable preference shares of R 1.00 each.

Ordinary Shares (50,000 of R2.00) (100.000)

Share premium - ordinary shares (12.000)

Share premium - preference shares (8.000)


Preference Shares (30,000 of R 1.00) (30.000)

Non-current assets 120.000

Net current assets 70.000

Share issue expenses 10.000

page: 24

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IFRS 2006

HowHow to Debit Equity Accounts (to Debit Equity Accounts (DissolvingDissolving) ...) ...

Share capital, share premium, and reserves are SH‘s equity. In case no par value shares have been issued the stated share capital account and reserves are SH‘s equity. Accounts can be used for:

Share premium account:

(1) issue bonus shares(2) write off preliminary expenses(3) write off expenses,commissions, discountsallowed(4) write off premium payable on the redemptionof pref. shares(5) write off the premiumpaid on treasury* shares

Capital redemtion

reserve fund:

(1) Issue bonus shares

Distributable reserve:

(1) Issue bonus shares

par value situation

*Treasury shares are own shares hold by the company – not allowed in SA, see Companies Act Sec.85!

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IFRS 2006

HowHow to Debit Equity Accounts (to Debit Equity Accounts (DissolvingDissolving) ...) ...

Share capital, share premium, and reserves are SH‘s equity. In case no par value shares have been issued the stated share capital account and reserves are SH‘s equity. Accounts can be used for:

Stated capital account:

(1) write off expenses, orthe commission paid on the shares issued(2) write off preliminaryexpenses (no discounts)

no par value situation

Note:

The issue of bonus shares,and premium payable onredemtion of preferenceshares can not be providedout of the stated capitalaccount.

Think about how you can protect retained earnings account!

page: 25

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QuestionQuestion 33


2005, 20-12

The T/B of Themba Ltd. included the following balances as at 31.12.20X3 –DR(CR)

At a meeting of directors on 20.12.20X3 it was decided to issue on 31.12.20X3 capitalization shares of one ordinary share for every three ordinary shares already held. This is to be arranged so that there is a minimum effect on distributable reserves such as retained income.

Required: Prepare the journal entry in Themba Ltd‘s books to record the above decision.

Ordinary shares (150,000 of R1.00) (150.000)

Share premium (20.000)

Non-distributable reserves - Redemption fund (25.000)

Retained earnings (90.000)

Net other assets 285.000

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QuestionQuestion 44


2005, 20-12

The T/B of DHARMA Ltd. included the following balances as at 31.12.20X2 –DR(CR)

The directors require all expenses to be written off in a manner that would least affect the retained income.

Required: Complete the journal entries for the above decision.

Ordinary shares (150.000)

Share premium (20.000)

Retained earnings (80.000)

Redeemable preference shares (55.000)

Share issue expenses - ordinary 9.000

Share issue expenses - preference 3.000

Debenture discount 10.000

Preliminary expenses 15.000

Underwriters Comm. - ordinary 6.000

Underwriters Comm. - preference 2.000


page: 26

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IFRS 2006

RedemptionRedemption of Sharesof Shares

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IFRS 2006

EffectsEffects of back of back buyingbuying

•Faul, M.A.; Everingham, G.K.; Lomax, A.C.: Financial Accounting. 5th edition, Durban (Butterworths): 1999, pg. 119.

Firstly, it should be clear that there is no gain or loss to a company as a result of buying back its own shares, as the transaction represents a transfer

between those shareholders who have sold their shares, and those who continue to hold their shares, rather than a gain or loss to the company.

page: 27

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IFRS 2006

RedemptionRedemption of of PreferencePreference SharesShares


(Lebone) 2005, 20-14

There is a Capital Maintenance Rule to protect the interest of creditors:

The original capital base of a company is to be maintained. In adopting this rule the Company Act prohibits companies from purchasing its own shares. (This would be a decrease in cash and a decrease in capital base)

An exception to this rule is the redemption of redeemable preference shares which is specifically allowed. One requirement for that is that a non-distributable reserve called the capital redemption reserve fund (CRRF) is created when preference shares are redeemed without the fresh issue of shares to replace them. A credit balance of the CRRF is only be used to issue bonus shares.

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IFRS 2006

B/S B/S afterafter IssueIssue of 100 EUR of 100 EUR PreferencePreference SharesShares


[EUR] [EUR]

Net other assets 200 Issued capital 100

Reserves

Preference Shares 20

Retained ear. 80

200 200


[EUR] [EUR]


Reserves


Retained ear. 80

200 200

SH‘s equity is 120.00 EUR

page: 28

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Capital Redemption Reserve FundCapital Redemption Reserve Fund

The Companies Act. requires that a non-distributable reserve, called the

Capital Redemption Reserve Fund (CRRF) be created when preference shares are redeemed.

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IFRS 2006

B/S B/S afterafter RedemtionRedemtion of Half of Sharesof Half of Shares


[EUR] [EUR]


CRRF 10


Retained ear. 70

190 190


[EUR] [EUR]


CRRF 10


Retained ear. 70

190 190

SH‘s equity is 120.00 EUR

Half of preference shares have been bought back and redeemed.

DR Preference Shares 10

CR Net other assets 10

DR Retained Earnings 10

CR Capital redemption reserve fund 10

page: 29

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IFRS 2006

RedemptionRedemption of of PreferencePreference SharesShares


(Lebone) 2005, 20-14

Capital

(nominal Value)

Premium on

RedemptionDividend

Written off to Written off to

New Share

Issue

Retained

Income

Retained

Income

Retained

Income

Share

Premium

Combination

Combination

Transferred

to

CRRF

Replaced by

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QuestionQuestion 55

Stainbank, L.; Oakes, D.: A Student‘sGuide to International Financial Reporting. 2nd. edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-19.

Redemption of redeemable preference shares. The T/B of Echo Ltd. at 31.03.20X4

is as follows:

Authorized share capital: (1) 300,000 ordinary shares of R2.00 each (= R600,000.00), (2) 60,000 14% redeemable preference shares of R1.00 each (= R60,000.00)

According to the term of issue, the 14% redeemable preference shares is redeemable on 31.03.20X4 at a premium of 25c per share. Ignore taxation implications

Required: Prepare the disclosures arising from the share repurchase to be

presented in the annual financial statements of Blush Limited for the year ended 31.12.20X5 in regards to case A...D

Ordinary share capital (250.000)

Share premium - ordinary (15.000)

Share premium - preference (5.000)


14% Redeemable preference shares (60.000)

Cash 160.000


page: 30

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QuestionQuestion 55

Stainbank, L.; Oakes, D.: A Student‘sGuide to International Financial Reporting. 2nd. edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-19.

A: 30,000 ordinary shares issued R2.00 at a premium 30c

B: Fully redemption out of retained income (Note: In terms of section 98 of the Companies

Act, redeemable preference shares may be redeemed (replaced) from the preceeds of a fresh issue –

R60,000 (R69,000).)

C: Issue 20,000 ordinary shares R2.00 at a premium 25c (Note: The Companies Act

Section 98 states that the proceeds (nominal value and premium) of a new share issue may be offset

against the nominal value of the preference shares to be redeemed.)

D: To illustrate the redemption of redeemable preference shares by the issue of no par value shares, the T/B of ECHO Ltd. is altered as below. Issue of 15,000 ordinary shares at R2.50 per share and replacing the residue from distributable reserves (minimum effect on distributable reserves required):

Stated Capital (125,000 ordinary npv shares) (265.000)

Share premium - preference (5.000)


14% Redeemable preference shares (60.000)

Cash 160.000


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IFRS 2006

Share Share buybuy backsbacks

Stainbank, L.; Oakes, D.: A Student‘s Guide to International Financial Reporting.

2nd. edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-19.

South African reacquisition is regulated by: (1) South African Companies Act and (2) JSE Securities Exchange.

A company can buy back own shares under the following conditions: (a) repurchase must be authorized by special resolution, (b) company must be authorized by its articles, (c) company must be solvent, (d) company must be able to pay its debts, (e) shares acquired must be cancelled as issued shares and restored to the status of unissued share capital, and (f) the entire issued share capital of the company may not be repurchased.

JSE Securities Exchange requires additionally: (g) specifically approved share buy backs are limited to 20% or the company‘s issued share capital, and (h) generallyapproved share buy-backs are limited to 10% of the company‘s issued share capital and may not be contracted at a price in excess of 5% above the weighted average of the market price of the security for the preceding 5 working days.

The Companies Act requires (i) the par value of shares bought back is to be paid from the share capital account, (k) the premium over the par value is to be paid from reserves, (l) a specified proportion of the no par value shares is to be paid from the stated capital account, and (m) the balance over the amount paid from the stated capital account is to be paid from reserves.

page: 31

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IFRS 2006

WritingWriting off off DifferenceDifference betweenbetween ReacquisitionReacquisition Value and Nominal ValueValue and Nominal Value

Stainbank, L.; Oakes, D.: A Student‘s Guide to International Financial Reporting.

2nd. edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-25.

The company acquires its own shares from its shareholders at a market price agreed to by the two parties. If the shares acquired are par value shares, the issued share capital is decreased. Where applicable, the premium paid on reacquiring the shares are written off against:

(1) the capital redemption reserve fund (CRRF)(2) the share premium account(3) retained income

If the shares acquired are no par value shares, the stated capital account of these shares is decreased by the average price of the NPV shares. When the company paid more than average price the difference may be written off against the accounts mentioned above.

All entries are to be shown in the SCE.

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ExampleExample 20.6 Share 20.6 Share buybuy backback

TSUMI Ltd. has the following share capital:

The directors of TSUMI Ltd. decide to acquire its own shares: (1) 20,000 ordinary shares at R2.50 each or: (2) 10,000 8% preference shares at R2.00 each.

The directors require the premiums of the acquired shares to be written off in a manner that least affects the retained income.

Show SCE after reacquisition.

Share Capital (100,000 ord. shares R1.50) (150.000)

Share premium - ordinary (50.000)

Preference shares (50,000 NPV 8%) (75.000)

CRRF (15.000)

page: 32

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IFRS 2006

ExampleExample forfor buybuy backsbacks

Stainbank, L.; Oakes, D.: A Student‘s Guide to International Financial Reporting. 2nd.

edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-19.

On 30.12.20X5 Blush Limited purchased 100,000 own ordinary shares at R 5.00

each. The company‘s summarized T/B at 31.12.20X5 is as follows:

The secondary tax on companies arising from the share buy-back was determined

by an independent tax expert and has been deducted in arriving at net profit for the year.

Required: Prepare the disclosures arising from the share repurchase to be presented in the annual financial statements of Blush Limited for the year

ended 31.12.20X5.

Ordinary share capital (R 1.00 shares) (400.000)

Stated capital account (400,000 ordinary shares 0

Share premium account (200.000)

Capital redemtion reserve fund (100.000)

Revaluation surplus reserve (300.000)

Retained earnings at the beginning of year (700.000)

Profit for the year (200.000)

Suspense account (share buy back) 500.000

Net assets 1.400.000

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IFRS 2006

ExampleExample forfor ReShareReShare buybuy backsbacks

Stainbank, L.; Oakes, D.: A Student‘s Guide to International Financial Reporting. 2nd.

edition, KwaZulu-Natal, South Africa (S & O): 2005, pg. 2-19.

On 30.12.20X5 BLUSH Limited purchased 100,000 own ordinary shares at R 5.00

each. The company‘s summarized T/B at 31.12.20X5 is as follows:

The secondary tax on companies arising from the share buy-back was determined

by an independent tax expert and has been deducted in arriving at net profit for the year.

Required: Prepare the disclosures arising from the share repurchase to be presented in the annual financial statements of Blush Limited for the year

ended 31.12.20X5.

Ordinary share capital (R 1.00 shares) 0

Stated capital account (400,000 ordinary shares (600.000)

Share premium account 0

Capital redemtion reserve fund (100.000)

Revaluation surplus reserve (300.000)

Retained earnings at the beginning of year (700.000)

Profit for the year (200.000)

Suspense account (share buy back) 500.000

Net assets 1.400.000

page: 33

- Controlling -


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IFRS 2006

LoanLoan CapitalCapital

FI.ppt

165.165.8383Source:





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IFRS 2006

TypesTypes of of LoanLoan CapitalCapital

• Subordinated loans

• Debentures

• Redeemable or irredeemable loans

• Bearer bonds

• Eurobonds

• Deep discount bonds

• Convertible loans

• Warrants

• Mortgages



page: 34

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• Subordinated loansA company may issue different classes of loans or bonds. The rights of some classes, while still ranking above shareholders, may be subordinated to a higher class of loans or bonds. Subordinated bonds are thus to be of slightly higher risk than the senior loans, and would therefore be expected to carry a higher rate of interest.

• Debentures


• Bearer bonds

• Eurobonds



• Warrants

• Mortgages



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IFRS 2006



• DebenturesDebentures are a form of loan established by a trust deed. Debentures normally carry a fixed and/or floating charge over some or all assets of the company. For publicity quoted companies, debentures are often quoted on the stock market.


• Bearer bonds

• Eurobonds



• Warrants

• Mortgages



page: 35

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IFRS 2006



• Debentures

• Redeemable or irredeemable loansRedeemable loans have a fixed date on which they are repayable. The repayment is usually at par (that is, the normal amount at which they were issued). Irredeemable loans have no fixed date for repayment, but can often be traded on the stock market.

• Bearer bonds

• Eurobonds



• Warrants

• Mortgages



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IFRS 2006



• Debentures


• Bearer bondsIf a loan is issued on a bearer bond, the holder is not registered with the company. However, the holder of the bond is regarded as the owner, and coupons attached to the bonds give the right to receive the interest, which is often paid annually.

• Eurobonds



• Warrants

• Mortgages



page: 36

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IFRS 2006



• Debentures


• Bearer bonds

• EurobondsThis term refers to loan capital issued by large companies that wish to raise their capital on the international market. They are often bearer bonds, and usually issued in a different currency from the currency of the home base of the company. Eurobonds are often sold to large banks or other financial institutions which either hold them as their own investment or sell them to their own clients.



• Warrants

• Mortgages



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IFRS 2006



• Debentures


• Bearer bonds

• Eurobonds

• Deep discount bondsThis is a form of issuing redeemable loan capital which allows the company to offer a lower rate of interest than usual. It compensates for this by offering the bonds at a discount to the nominal value at which they are to be repaid. Investors may often be attracted to this form of bond, because of its tax treatment.


• Warrants

• Mortgages



page: 37

- Controlling -


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IFRS 2006



• Debentures


• Bearer bonds

• Eurobonds


• Convertible loansA convertible loan gives the lender the option to convert the loan to equity shares at a fixed price at specified future dates. The lender remains a creditor of the company until conversion takes place. If the lenders convert the loan into shares, they become members of the company, with the same rights and risks as other shareholders of the same class of shares. Conversion to shares is not compulsory, so the lender only takes advantage of the conversion rights if the share price at the conversion dates are above the conversion price. From the investor‘s point of view, this offers a good opportunity to participate in any future increase in the value of the shares of the company.

• Warrants

• Mortgages



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IFRS 2006



• Debentures


• Bearer bonds

• Eurobonds



• WarrantsWarrants are instruments by which the holder has the right (not the obligation) to buy shares in the company at a fixed price at specified future dates. The warrants do not give the right to any other benefit from the company, and no interest is paid on them. In a sense, they represent a form of gamble by the investor that the share price will be favorable at the specified future dates. This method is one way in which the company can raise capital with no immediate cost (in form of interest payments). The cost comes later. Warrants are sometimes issued in conjunction with loan capital, and sometimes to existing shareholders on the basis of their present holding.

• Mortgages



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• Debentures


• Bearer bonds

• Eurobonds



• Warrants

• MortgagesA mortgage is a loan secured on the security of freehold property. Normally, mortgages are provided by large financial institutions, and they have strict conditions applied. Mortgages are usually very long-term lending, and raised for the purpose of acquiring of improving the property on which the loan is secured.



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DebenturesDebentures, , somesome CharacteristicsCharacteristics

Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape Town

(Lebone) 2005, 21-6.

Debentures do not form part of the owner‘s equity of the company, but are classified as long term liabilities.

A debenture consists of (1) the capital or nominal value which will be repaid on the redemption of the debenture and (2) a periodic (fixed) interest payable, calculated on the nominal value of the debenture.

Debenture holders receive a fixed interest irrespective of whether the company makes a profit or not.

Debentures have no voting rights.

Debentures can be issued at par, at a premium, or at a discount – depending on the difference between market rate and interest rate of the debenture.

Debentures are usually offered to the public or financial institutions for subscription. When applications for debentures received exceeds the amount available, the company has got an oversubscription for debentures.

Debentures are repayable after at least one year.

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IssueIssue of of DebenturesDebentures

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QuestionQuestion 66

Flynn, D.; Koornhof, C.: Fundamental Accounting. 5th edition. Cape Town

(Lebone) 2005, 21-6.

At a meeting of the directors of KILO Ltd. on 10.3.20X3 it was decided to offer

10,000 12% mortgage debentures of R100 each to the public for subscription on 31.3.20X3. Debentures will be redeemed on 31.3.20X8. The financial year ends 31.12. A first mortgage bond secures debentures over land and buildings Ignore interest calculations.

Required: (1) Prepare the necessary journal entries to give effect to the issue of the debentures. (2) Prepare the equity and liability section of the B/S after the issue of the debentures.

Distinguish the following situations:

(a) The directors decide to issue the debentures at par. Applications are received for 10,000 debentures and all debentures are subsequently allotted.

(b) The directors decide to issue the debentures at 105% payable in full on application. Applications for 13,000 debentures are received. Unsuccessful

applicants are refunded.

(c) The directors decide to issue debentures at 97% payable in full on application. Applications for 8,000 debentures are received.

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AllocationAllocation of of DebentureDebenture Discount, Discount, IssueIssue CostsCosts and and PremiumsPremiums

Debenture discount, Issue costs and premiums are related to the useful life of debentures. They are to be considered proportionately over the lifetimeof the debentures. There are two alternatives:

(1) Debenture discount and issue cost are shown as deferred expenses to be included with other deferred expenses and the debenture premium is shown as a deferred credit

(2) Debenture discount and issue costs are deducted from the nominal value of the debentures and the debenture premium is added to the nominal value of the debentures.

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QuestionQuestion 77

An extract from the T/B of DABULA Ltd. on 1.01.20X4 contained the following:

Interest is payable on 31.03. and on 30.09. Debentures are secured by a first mortage over land and buildings. Debentures are redeemable on 31.03.20X8. (5 years)

Required: Prepare the necessary journal entries to record the debenture premium and debenture interest for the year ended 31.12.20X4. Prepare the

equity and liability section of the balance sheet after passing the above journal entries as at 31.12.20X4.

Debentures (10,000 12% mortgage at R1.00) (1.000.000)

Debenture premium (issued at 105% on 31.3.20X3) (42.500)

Debenture interest accrued (30.000)

Net other assets 1.072.500

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QuestionQuestion 88

An extract from the T/B of HASSAN Ltd. on 1.01.20X4 contained the following:

Interest is payable on 31.03. and on 30.09. Debentures are secured by a first mortgage over land and buildings. Debentures are redeemable on 31.03.20X8. (5 years)

Required: Prepare the necessary journal entries to record the debenture premium and debenture interest for the year ended 31.12.20X4. Prepare the

equity and liability section of the balance sheet after passing the above journal entries as at 31.12.20X4.

Debentures (10,000 12% mortgage at R1.00) (1.000.000)

Debenture discount (issued at 97% on 31.3.20X3) 25.500

Debenture interest accrued (30.000)

Net other assets 1.004.500

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QuestionQuestion 99

The T/B of MATLALA Ltd. on 1.04.20X5 is as follows:

Required: Pass all journal entries up to 31.3.20X7 to record the redemption

of the debentures. The financial year end 31.3. The debentures are redeemable on 31.3.20X7 at 106%.

Debentures (600 8% mortgage at R100) (60.000)

Debenture discount (issued at 90% on 1.04.20X5) 6.000

Other net assets 54.000

Documents

CONTROLLING Issue of Shares and · PDF file- Controlling - Prof. Dr. Carsten ... FI.ppt 165. 3 Source: University of Applied Sciences ... Each voting share carries one vote at general