ABSTRACT
Business entities require funds to develop their businesses and to help them make a profit. There is a wide choice of financing options open to modern corporations. The focus of this chapter will be on how one becomes a member of a company and the choice of financing (debt and equity) options open to body corporates. It is important to note that in law there is a clear distinction between share capital (known as equity) and debt (loan) capital, unlike in accounting, where there exists a closer relationship between debt and equity. This difference can cause confusion, especially with hybrid financing options such as a redeemable preference shares (RPS) or convertible debentures. The choice of fundraising method and the category of finance utilised by the corporation will depend on the cost of capital and a range of other economic factors, rather than the legal requirements.
