Pankaj Arora (Learner) (3134 Points)
07 October 2011
Dear All
I buy 10 shares of tata motors from Bombay stock exchange pls tell me when I buy shares of tata motors pls let me know what entry tata motors will have pass in their books. And also in which type of register record my detail like shareholder register folio whatever.
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 07 October 2011
When you purchase any share in secondary market, the original issuer of security has nothing to do with regards to your purchase , except , registering your name in the Shareholder's register. That too is carried on electronically.
Pankaj Arora
(Learner)
(3134 Points)
Replied 07 October 2011
But how they will record fund recd from investor to buy shares?
CA RICHA BADALIA
(CA,CS)
(1682 Points)
Replied 07 October 2011
Every purchase is matched with a corresponding sell in share market.Company is not receiving the fund when u are buying the share ,the seller is receiving the money .
Pankaj Arora
(Learner)
(3134 Points)
Replied 07 October 2011
Is not possible that in market net effect of buying and selling shares comes buy 1000 shares after adjusting with sell shares than where it will record in their books?
CA Sumiit B Nagpal
(Business)
(1077 Points)
Replied 07 October 2011
| Originally posted by : CA RICHA BOTHRA | ||
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Every purchase is matched with a corresponding sell in share market.Company is not receiving the fund when u are buying the share ,the seller is receiving the money . |
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Pankaj Arora
(Learner)
(3134 Points)
Replied 07 October 2011
Why r u repeating answer just tell me what I asked just after richa mams reply…
Syam kamal
(Company Secretary)
(156 Points)
Replied 07 October 2011
Dear Mr. Pankaj
Your query was well clarified by Mr. Goutam and Ms.Richa Bothra. When you buy a share in secondary market, the Company will not receive any money. It happens only when a company makes an IPO or FPO or Right Issue etc i.e fresh issue of shares out of its unissued capital. When you place a buy order in stock exchange the order will match against the best sell order based on price and get executed. The money which you pay goes into the trading account of the seller as per the settlement mechanism prevailing in the stock exchanges
Pankaj Arora
(Learner)
(3134 Points)
Replied 07 October 2011
But sir what will happen if today investor sells 10000 shares and investor buy 5000 shares so where it will record net effect of sell 5000 shares and if we opposite it to means buy 5000 shares net effect of share trading in single day.
gnanagurusasmy
(ca)
(55 Points)
Replied 07 October 2011
There is no possiblity of selling 10,000 shares and buying 5,000 shares as assumed by you. The trade takes place for equal number of buying and selling of shares.
Assume that if you are procuring 100 Kgs of rice from a merchant, you are buying 100 kgs and merchant is selling 100 Kgs. There can not be a situation that you buy 100 kgs but merchant sells 50 kgs, which is factually incorrect.
Syam kamal
(Company Secretary)
(156 Points)
Replied 07 October 2011
Trade happens only when a buy order and a sell order matches based on the same price. That means if you are placing buy order of 1000 tata motor @ 158.80 then it will get executed only when some other trader or investor like you have placed a sell order of the same scrip at the same price at an equal or more quantity otherwise the order get cancelled at the end of the trading hours. There is no possibility of selling 10,000 shares and buying 5,000 shares. I would suggest you to approach any stock broker and see an online trading screen
ars
(CS)
(445 Points)
Replied 07 October 2011
Dear Pankaj,
To give u idea abt. share trading vis a vis the co. records:
A. Physical Shares : 1. All the sharees floated by the co. are earmarked by the Distinctive Numbers (DNR). ie. if the co. has 50 Lac shares it has DNR of 1 to 500000.
2. Each individual holers gets shares allotted against the DNR. i.e u could be holding 100 shares under DNR 101-200 and I hodling DNR 111001-111100.
3. Each holders is issued a certificate with details of name / no. of shares / DNR etc.
4. The ROM - Register of members is kept and updated whenever transfer take place.
B. Electronic or demat holding:
1. Your holding of 100 shares stated above if to be demated then u need to approach a DP- open an account and demat your shares. The co. would transfer your physical shares in favour of the Depository and in turn it will credit those shares into your demat a/c. displayed in your demat statmt.
2. In co.s book the shares will stand in Depost. name agaisnt those same DNR and certificate will be systematically shredded .
C. Share trading: 1. In spot market, traded electronically, there has to be equal no. of purchases matching the sales. i.e. for every share purchased equal no. of shares are sold.
2. T+2 settlement: All the trasactions that takes place today 7/10/11 will be settled on 11/10/11 i.e. Transaction + 2 working days. On which day the purchser's pays in the sellers delivers. practically, the investors a/c are debited on the day of transaction to facilitate the broker to pay on the day of settlment. the shares get credited with the deposirtory and in turn in to your a/c at closing hrs. of thar date.
3. what happens if you dont pay for purchse or do not have credit of your shares sold.
for non payt. against purchse - the broker will keep delivery into his account untill it is settled.
for non delivery of shares sold- there is a system called "auction of shares", wherein your shares will be auctioned on the platform of the exchange and profit / loss will be settlled thru your a/c. with broker.
4. Derivatives - Future and options: These are not traded in spot but are traded now for future. i.e. the buyer buys now assuming the price of the particular share would go up in future and the seller does exactly the other way. each shares has different trade lot and margin amount. one can trade by pauing certain margin amount insteas the full amount , applicable in the spot market.
The co. is not at all connected with the daily transaction of its shares at the exchanges. the depositories provide the beneficiary position to the co. - once a week. this carries the details of the invesors holding the shares of the co. at the closing hrs.of the preceeding working day.
The co. relies on this data for all purposes including the corporate actions like payt. of dividend etc.
I tried to cover all the areas, in brief. should u need more info. pl feel free to ask.
Prabhakaran
(Accounting)
(102 Points)
Replied 07 October 2011
| Originally posted by : Pankaj Arora | ||
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Dear All I buy 10 shares of tata motors from Bombay stock exchange pls tell me when I buy shares of tata motors pls let me know what entry tata motors will have pass in their books. And also in which type of register record my detail like shareholder register folio whatever. |
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Hi Pankaj,
There is a possibility of selling 10000 shares and buying 4000 shares called "short selling"
In the case of short selling one can keep those stocks (6000) maximum 1 or 2 trading days only according to the broker's offer (e.g. ICICI securities offered as STBT-Sell Today Buy Tomorrow) with high risk, because the margin amount would be higher than normal.
at any cost either you have cover (buy) those short selling stock or broker will do on behalf of you as the short selling is a limited time instrument.
as other members mentioned, company does not receive any money but the risk is borne to broker only for the remaining 6000 shares that risk is compensated by you charging more brokerage or more margin money or both
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 08 October 2011
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Dear All I buy 10 shares of tata motors from Bombay stock exchange pls tell me when I buy shares of tata motors pls let me know what entry tata motors will have pass in their books. And also in which type of register record my detail like shareholder register folio whatever |
Pankaj, Please be specific , If you wants to know about the trading mechanism, then refer Shyam, ars, Prabhakaran.
However your original question is towards the entry in the books of company , of which , the shares are purchased & I still stands on my words posted earlier
raghunath
(manager)
(29 Points)
Replied 08 October 2011
why ca institute do this
OLL Number |
*Check Merit |
Name |
|
Group II |
|
Cost Accounting & Financial Management |
060E |
Taxation |
038 |
Information Technology and Strategic Management |
046 |
Total |
144 |
Result |
FAIL |
Grand Total |
144 |
this candidate failed in first time and passed at at the time of reverification.ca institute doing like this
CAclubindia
