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A public company has 2 000 000 ordinary shares of 50k each and offers 50%...

Commerce
JAMB 2006

A public company has 2 000 000 ordinary shares of 50k each and offers 50% for subscription at N2 per share.

If the shares were fully subscribed, calculate the issued capital?

  • A. N4 000 000
  • B. N2 000 000
  • C. N1 000 000
  • D. 500 000
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Correct Answer: Option B
Explanation

Total number of ordinary shares: 2,000,000.

Nominal value of each share: 50k (which is N0.50)

Subscription offer: 50% of the shares

Subscription price: N2 per share

Shares offered for subscription = 5% of 2,000,000 = 1,000,000.

Issued Capital = Shares offered × Subscription price = 1,000,000 x 2 = N2,000,000.

The issued capital when the shares are fully subscribed is N2,000,000.


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