Matters which only shareholders can sanction at the general meeting.

The matters which only shareholders can sanction at the general meeting are:
 1. Appointment of auditors and fixation of remuneration of auditors in the annual general meeting.
 2. Declaration of dividend
 3. Appointment of relative of Directors to an office or a place of profit in the company. 
 4. Sale, Lease or disposal of the whole of the company's undertakings or a substantial part of it and donations above a certain limit. 

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Borrowing Cost

Borrowing Cost means any charge or expenses on debt obligation or borrowed funds which include the following:
      a. Interest and other similar costs 
      b. Amortization of Discount on Issue of Debenture

      c. Commitment Charges
      d. Interest in the nature of finance lease.
      e. Exchange difference in the nature of finance. 
Borrowing cost for a business tends to rise during time of economic expansion and inflation when prevailing market interest rates rises. 
Treatment of Borrowing cost: 

 1. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are included in the cost of the asset. Such borrowing cost should be capitalized with the cost of Qualifying Asset. 
             Journal Entry: Cost of  Qualifying Asset A/c...............Dr
                                                 To Interest or Borrowing Cost A/c
                                (Being amount of borrowing cost included in the cost of asset) 
2. Borrowing cost on other items (other than qualifying asset) are recognized as an expense and shown in the debit side of Profit and Loss Account. 
              Journal Entry: Profit and Loss A/c...........Dr
                                              To Borrowing Cost A/c
                                            (Being amount written off)

Qualifying Asset: 
  Qualifying Assets are those asset which take substantial time to get ready for its intended use or sale. The time period of 12 months can be considered as the substantial time period. 
 Examples of Qualifying Asset: 
  Plant and Machinery, Building, Ships, Alcohol or Liquor
                        

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Kinds of Share Capital

1. Authorized or Registered Share Capital:
    It is the maximum value of securities (or share capital) that the company is authorized to issue.It is mentioned in the capital clause of  Memorandum of  Association (MOA) of the company. It is also called as Nominal Capital. 

2. Issued Share Capital:
     It is that part of Authorized Share Capital which is offered to public for subscription. It is computed at nominal value. 

3. Subscribed Share Capital:
      It is that part of Issued Share Capital which has been subscribed or taken up by the purchaser of shares or securities at nominal or face value and has been allotted. This capital may also be referred to the part of Issued share capital for which application for subscription has been received from the public. 


4. Called Up Share Capital: 
     It is that part of subscribed share capital that have remained fully or partially unpaid and the holders of such shares are called upon to pay the balance. In other words, it is the amount which the shareholders are required to pay on the value of shares held by them. 

5. Paid Up Share Capital: 
      It is that part of the subscribed share capital for which money or any other consideration has been received by the company in respect of the shares subscribed. It also refers to the amount of company's capital funded by shareholders. 



       

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