Share capital

Welcome to today's session on share capital. Share capital is a key way companies in the United Kingdom and United States of America raise funds and structure their ownership. It refers to the money a company raises by issuing shares to investors with these shares representing ownership and granting rights such as voting and a share in profits. When a company seeks external funding, it usually does so by issuing share capital, shaping both ownership structure and the company's path for future financing and governance. Within share capital, key distinctions exist. In the UK, authorized share capital is the maximum a company can issue, while issued share capital is the amount sold to shareholders. In the USA, these are called authorized capital stock and outstanding shares. Companies may issue different share classes such as common and preference shares, each with different rights. Understanding these terms is important as they affect legal obligations and the mechanics of capital raising. Raising additional capital by issuing more shares is a key funding mechanism, especially for companies aiming for growth or acquisitions. The most notable event is the initial public offering or IPO, where a company offers shares to the public for the first time, gaining broader investment and greater visibility. After an IPO, companies might conduct secondary offerings to raise more funds. In the UK, pre emptive rights often let existing shareholders buy new shares