Instruments in Capital Markets

The changes in the regulatory framework of the capital market and fiscal policies have resulted in newer kinds of financial instruments (securities) being introduced in the market.

The variations in all the instruments depend on the tenure, the nature of security, the interest rate, the collateral security offered and the trading features, etc.

Debentures

These are issued by companies and regulated under the SEBI guideline. The rights of investors as debenture holders are governed by the Companies Act, which prohibits the issue of debentures with voting rights.
There are many types of Debentures like Participating debentures, Convertible debentures with options, Third party convertible debentures and many more.


Bonds

Indian Development Financial Institutions (DFIs) in India, like IDBI, ICICI and IFCI have been raising capital for their operations by issuing bonds like Income Bonds, Tax-free bonds, Capital Bonds etc.
In addition to the interest rates and maturity profiles of these instruments, the issuer institutions have been including a put/call option.


Preference Shares

Owners of preference shares enjoy a preferential treatment with regard to corporate actions like dividend. They also have a higher right of repayment in case of winding up of a company.
The various types of Preference Shares are:
• Cumulative and non-cumulative
• Participating
• Cumulative & Redeemable fully convertible to preference shares
• Cumulative & Redeemable fully convertible to equity shares.


Equity Shares

These represent the proportionate ownership of the company. This right is expressed in the form of participation in the profits of the company. Some hybrid securities like equity shares with detachable warrants are also available.

Some other Variants are Derivatives and Hedging.


Dematerialisation of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the beneficiary owner's account.
India has adopted dematerialisation route to depository. In a depository system, the investors stand to gain by way of efficient settlements, lower costs and lower risks of theft or forgery, etc....................

Who will be David for Satyam??

You have heard a lot and read a lot more already about what is being termed as India's Enron. So I am not going to blabber about the same.

After the ongoing scam-like situation leading into the so called, Biggest Fraud in the Corporate History of Corporate India Inc., rumours, as usual, are on air for speculating observances on the selling of Satyam.

The Hyderabad based giant is in talks with L&T board for further manipulation. All things might get clear by the end of the Board Meet on 31st Jan.

Speculatuions are getting ripe as L&T(having a stake of 4.4%) has increased its stake to about 12% in the fallen Goliath. According to the Company Law, if a company acuires above 15% stake of a private firm it has the rigth to take the company under its control.

Seeing the trend L&T has started the buying and is estimated to buy a large share of 7.6% more making it a 16% stake-holder, the highest is the list.

Data provided(as per the NSE and BSE) showed that, on Friday, L&T paid about Rs 176 crore to buy 5.1 crore shares of the IT company.

The two have been in serious talks so as to prevent attrition and other misfortunes for the company. LIC, IDBI, BoB(Courtesy: Economic Times) has provided cash assistance to Satyam so that they can pay the internal customers of the company, their wages, actually!! this is hapenning and true...............