Disadvantages of using ordinary share capital to a company

1. The floatation costs are higher than those of debt
2. It is only accessible to companies that have fulfilled the capital markets authority requirements
3. It can lead to dilution of ownership of control of the firm by the shareholders
4. Since the dividend payment is not tax allowable then the company does not enjoy a tax saving
5. The cost of this source of fund(dividend) is perpetual as ordinary shares are not redeemable securities
6. The firm has to follow set guidelines on disclosure and publishing of financial statements.

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