BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -When shares are issued against the purchase price, it is called ‘Issue of shares for consideration other than cash’. In other words cash is not received by the company against such shares. In this case shares are not issued to the public in general.

Detailed explanation-2: -It may happen that a company has acquired any other company or purchased some assets from a vendor and then instead of paying by cash, the company has opted to settle the payment by issuing debentures to the vendors.

Detailed explanation-3: -When an asset is acquired by a company, the payment of asset price can be made by the issue of shares or in cash to the vendor. Moreover, when shares are given against the purchase price, it is known as ‘Issue of shares for consideration other than cash’. In this case, shares are not open to the general public.

Detailed explanation-4: -A company can issue shares for consideration other than cash. Common examples include issuing shares in return for property, assets the company needs or (e.g. in a takeover) shares in another company.

Detailed explanation-5: -When a company purchase some assets it is supposed to pay the purchase consideration in cash but sometimes due to lack of sufficient fund, company may issue debenture for the payment of such purchase consideration. This is known as issue of debenture for consideration other than cash.