With no fixed par values for shares, will it have a bearing on capital-structuring decisions of companies?
A flexible par value of shares should not have any effect on capital-structuring decisions, since the capital structure is normally dependent on the amount of capital rather than the number of shares. By doing away with the fixed par value of shares, a retail investor who could not invest because of the minimum number of shares to be invested (at a par value of Rs 10 or at a premium), will find it attractive if shares are offered at low prices. Further, companies will find it easier to float public issues to raise funds by way of capital which will give them leverage to get loans from banks/financial institutions. • There is a view that companies may now find it more attractive to undertake splitting of shares instead of bonus issues. Your comments. Companies may go in for splitting of shares instead of issuing bonus for the reason that this will not affect their reserves. Bonus shares have to be issued by capitalising the free/general reserves, whereas face-value splits will not affec
