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Md. Hasan (Student CA IPC / IPCC) (122 Points)

10 May 2014

Why does a company issue shares to raise capital if it can get cheaper debts from lenders.

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CA. Mayur (Service) (147 Points)
Replied 11 May 2014

Share capital or to say equity share capital is owners contribution in organisations and it represents residual interest in business. As owners own capital is on stake in business they will always ensure they run business with bonafide intention of to achieve entity stated goals . Even lenders will never fund a organisation where owners does not have contributed their own capital. Hope this may answered your doubt.