WLC 25 CHAPTER 06 – SHARES

CHAPTER 6
SHARES
MEANING AND NATURE
The capital of a company is divided into a number of indivisible units of a fixed amount. These units
are known as `shares. A share is not a negotiable instrument. A share is an expression of proprietary
relationship between a shareholder and the company.
A share is share in the share capital of a company and includes stock except where a distinction
between stock and share is expressed of implied. [Section 2 (46)]
By share in a company is meant not any sum of money but an interest measured by a sum of money
and made up of diverse rights conferred on its holders by the Articles of the Company, which
constitute a contract between him and the company. [CIT v. Standard Vacuum Oil Co. [1966] Comp
LJ 187 (SC)]
A right to participate in the profits made by a company, while it is a going concern and declares a
dividend and in the assets of the company when it is wound up [Bucha F Guzdar v. CIT, Bombay LR
617 (SC)]
Stock – the aggregate of fully paid up share of a member merged into one fund of equal value. It is a
set of shares put together in a bundle.
KINDS OF SHARES [SECTION 86]
The shares of company shall be of two kinds namely: -
Equity Share capital – Shares which are not preference shares
with voting rights
with differential rights - issued in accordance with the Companies (Issue of share capital with
differential voting rights) Rules 2001.
Preference Shares – that part of the share capital which fulfils both the following conditions
preferential dividend; and
preferential right at the time of winding up.
The Preference Shares may be of two types: -
Cumulative Preference Shares – It confers a right to claim a fixed dividend of the past and the current
years out of future profits. The fixed dividend keeps on accumulating till is fully paid up. Where the
dividend is due for more than two years from the date of shareholders meeting, the member shall have
a right to vote.
Non-cumulative Preference Shares – in these shares the unpaid dividend for the past years do not
accumulate. The voting rights on such shares accrue if the dividend is in arrear for 2 financial years
immediately preceding the meeting or any 3 years during a period of 6 financial years preceding the
meeting.
The companies are now prohibited from issuing any preference share, which is irredeemable or is
redeemable after the expiry of a period of 20 years.
CLASSES OF CAPITAL
Usually the following classification of capital is made.
Nominal or Authorised Capital - This is the sum mentioned in the Memorandum of Association as the
capital of the company. It is known as the nominal or authorised capital, since this is the maximum
amount of capital, which the company is authorised to, raised by the issue of shares. The company
usually fixes this amount keeping in view the estimated capital which it may require for its present as
well as its future needs. This is divided into shares of fixed denomination.
Issued Capital - It is that part of the authorised capital which is issued for the time being for public
subscription.
Subscribed Capital - That part of the issued capital, which is actually subscribed or taken up by the
public, is known as the subscribed capital.

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WLC 26 CHAPTER 06 – SHARES

Called-up Capital - It is that portion of the capital that is called-up or demanded by the company.
Usually the total amount due on the subscribed shares is not demanded by the company at a time, but
is called up in three four installments payable on application, allotment, first call, final call etc.
Reserve Capital - It is that part of the uncalled capital which the company has decided not to call up
except at the time of the winding up of the company.
ISSUE OF SHARES [SECTION 81]
A company limited by shares may issues share in the following three ways: -
To the existing members (Rights Issue/Pre-emptive right)
The existing members of the company shall have the first right to further issue of shares (Pre-emptive
right) - Where at any time after the expiry of 2 years from the formation of a company or at any time
after the expiry of one year from the first allotment of shares, whichever is earlier. Such members
shall have a right to renounce in favour any other person. In case, the existing members/renouncee do
not subscribe, the Board of Directors may dispose of them in such manner as they think most
beneficial to the company. SEBI has issued guidelines for listed/to be listed companies. The offer
letter is called `Letter of Offer`.
To the Public – not wholly to the existing members (Section 81(1A) (Public Issue)
When the company issues to Public (persons other than existing members). The offer letter is called
`Prospectus`. The existing shareholders shall pass a Special Resolution for making public issue of the
company. Every company has to comply with SEBI (DIP Guidelines, 2000.
Issue of further shares by conversion of loans of or debentures issued to financial institutions/banks,
as per Loan Agreement approved by the Central Government.
Issue of further shares by conversion of Convertible debentures in to Equity shares, as per the terms of
issue.
SEBI (DIP) GUIDELINES 2000
Every listed/to be listed company for making further issue shall have to comply with SEBI
(Disclosure and Investors Protection) Guidelines 2000 besides the provisions of the Companies Act
1956. it must be noted that SEBI has issued separate specific Rules and Regulations for each of the
market intermediary.
Some of the salient features of the DIP Guidelines are given below :-
PARTICULARS RIGHTS ISSUE PUBLIC ISSUE
APPLICABILITY Existing listed or to be listed post Existing listed or to be listed post
APPOINTMENT OF SEBI issue issue
REGD. CAT. I Compulsory where the issue size is Appointment of Merchant banker is
MERCHANT BANKER more than Rs. 50 lakhs mandatory.
APPOINTMENT OF All intermediaries- Registrar (Cat.
INTERMEDIARIES –SEBI I), Brokers, sub-brokers, Bankers, All intermediaries- Registrar (Cat.
REGISTERED Underwrites should be SEBI I), Brokers, Brokers, Bankers,
NATURE OF OFFER Registered and give consent therefor Underwrites should be SEBI
DOCUMENT The Letter of Offer document shall Registered and give consent
FIRM ARRANGEMENT be prepared as per SEBI Guidelines. therefor
OF FINANCE At 75% should be thru verifiable The Prospectus shall be prepared as
NATURE OF means per SEBI Guidelines.
SHAREHOLDERS Ordinary resolution At 75% should be thru verifiable
RESOLUTION. means
FILING OF DRAFT Draft Letter of Offer duly signed by Special resolution
OFFER LETTER BY Directors with price band, Due
MERCHANT BANKER Diligence Certificate to be filed at Draft Prospectus duly signed by
AT 21 DAYS ALONG least 21 Days` before issue opening. Directors with price band, Due
WITH THEIR DUE Diligence Certificate to be filed at
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WLC 27 CHAPTER 06 – SHARES

DILIGENCE Not before 22 days from the date of least 21 Days` before issue opening.
CERTIFICATE filing of draft offer letter and
EARLIEST ISSUE maximum of 365 days` from the Not before 22 days from the date of
OPENING date of SEBI Observation Letter. filing of draft offer letter and
To be obtained before the issue maximum of 365 days` from the
opening date of SEBI Observation Letter.
TO OBTAIN`LETTER To be obtained before the issue
PRECEDENT TO opening
LISTING` FROM THE
CENTRAL LISTING
AUTHORITY AND IN
PRINCIPAL APPROVAL Not applicable
FROM CONCERNED No applicable
STOCK EXCHANGE 20% post issue
PROMOTERS` 3 years from the date of allotment in
CONTRIBUTION Not applicable for an existing listed public issue. Lock in of 1 year for
LOCK IN PERIOD company shares in exceeding promoters’
contribution.
Net Tangible Assets – Rs. 3 Cr.;
ELIGIBILITY Track of distributable profits – 3 out
of preceding 5 years; Issue Size –
upto 5 time pre issue net worth; post
Mandatory before listing issue capital – Rs. 10 Cr. [Separate
Free pricing guidelines for Infra structure,
Re. 1/- where the issue price is more software companies]
AGREEMENT WITH than Rs. 500/- Mandatory before listing
DEPOSITORY No applicable Free pricing
PRICING OF SHARES Re. 1/- where the issue price is
FACE VALUE OF 1% of the issue size more than Rs. 500/-
SHARES Discretionary IPO to be made through Book
Discretionary Building route with Green Shoe
PROVISIONs RE; IPO To be open for Min 30 days Option (Stabilising Agent)
Not applicable
SECURITY DEPOSIT Specified in SEBI Guidelines Compulsory
NEW SHARES IN DEMAT Compulsory
Underwriting To be open for min 3 days and more
ISSUE CLOSURE than 10 days
Specified in SEBI Guidelines, Lead
POST ISSUE Merchant Banker accountable.
OBLIGATIONS

ALLOTMENT
When an application offering to subscribe to shares of the company is accepted by the issuer
company, is called allotment.
General principles Statutory provisions
Proper authority of the Board of Registration of prospectus with ROC
Directors/Committee of Directors 25% of nominal amount of share as minimum
Allotment against application only application money
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WLC
Allotment not be in contravention of any other
law e.g. SEBI Act 1992, FEMA 2000
Allotment to be made with in reasonable time
Communication of allotment to the applicant
must be complete
Allotment must be absolute and unconditional
IRREGULAR ALLOTMENT
If allotment of share is made in contravention f the provisions of the Act, then the allotment is termed
as irregular.
Irregular Allotment - Its Effects
Sl. Nature of irregularity
No.
1 Copy of a prospectus not
delivered to the Registrar
2 Application money being less
than 5% if the nominal value of
share
3 Minimum subscription not
subscribed for
4 Application money not kept
deposited with a scheduled bank
5 A statement in lieu of prospectus
not delivered to the Registrar
28 CHAPTER 06 – SHARES
Moneys to be kept in a separate bank account
Minimum subscription
Allotment to be made atleast 5 days of issue
opening
Prior in principal approval of Central Listing
Authority and Stock Exchanges where shares
proposed to be listed.
Basis of allotment as per SEBI Guidelines –
accountability of Merchant Banker, Registrar to
the Issue in consultation with Executive Director
of SE and Public Representative
Legal effect on Liability of Company/ Director etc.
allotment
Allotment is void Company and every person
knowingly a party to the issue of
such prospectus, punishable with
fine may extend to Rs. 50,000
Allotment is Director, willfully authorising
voidable contravention liable for damages to
the company as well as to the
allottee
Company and every officer of the
company punishable with fine
which may extend to Rs. 5,000
Allotment is On closure of the issue(60 days
voidable from the closure if the issue is
underwritten), all moneys to be
refunded to the applicants without
interest and if not refunded within
next 8 days directors shall be liable
to pay money with 15% pa interest
Director willfully esponsible for
contravention liable for damages to
the company as well as to the
allottee
Allotment is Director willfully authorising the
voidable contravention liable for damages to
the company as well as to the
allottee
Allotment is Company and every officer of the
voidable company punishable with fine
which may extend to Rs.10,000
Director willfully authorising the
contravention liable for damages to
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WLC 29 CHAPTER 06 – SHARES

the company as well as to the

allottee
6 Time limit as to opening of the Allotment is valid Company and its every officer, who
subscription list not observed is in default, punishable with fine
which may extend to Rs.50,000
7 Condition as to listing of shares Allotment is void If permission is not granted with 10
on a recognised stock exchange weeks of closing of the subscription
not observed list, application money to be
refunded. if not refunded within 8
days, directors to repay with interest
@ 15% pa
Company and every officer of the
company, who is in default, liable
to pay fine upto Rs.50,000. In case
refund is delayed beyond 6 months
director also liable to imprisonment
upto 1 year.
RETURN AS TO ALLOTMENT [SECTION 75]
It has been provided under the Act within 30 days of the allotment a return of allotment on Form No.
2 detailing the aggregate number of shares allotment, face value, amount paid up on each share,
authority for allotment, name, address and occupation of each allottee should be filed with ROC.

UNDERWRITING AND BROKERAGE

Underwriting is in the nature of an insurance against the possibility of inadequate subscription. A
public company cannot proceed to allot shares offered to the public unless the issue of raises the
amount specified in the prospectus as the minimum subscription, is raised by the issue of shares….An
underwriter is entitled to enter into subsidiary agreement with which the company is not concerned.
They are not required to be disclosed in the prospectus…. The underwriting agreement being a
contract that the underwriter will either himself purchase of procure purchasers for the shares
underwritten by him, it is no concern of the company as to how the underwriter procures the
purchasers. (Re: Nani Gopal Lahiri)
Brokerage is the reward paid to an intermediary (called broker) who brings about a bargain between
the seller and a proposed investor (purchaser) of shares or debentures. Brokerage is different from
underwriting commission because the underwriter undertakes to subscribe for shares in case of public
default – it is insurance on the happening of an agreed event; but the brokerage is only a commission
for procuring the securities for the company.
SEBI has issued separate guidelines for underwriters as well as the brokers.
SEBI GUIDELINES COMPANIES ACT
UNDERWRITERS BROKERAGE UNDERWRITERS BROKERAGE

SEBI Registered SEBI Registered Authority under Articles Authority under

Lead manager to satisfy Commission – 5% for Articles
ability of underwriter to shares Reasonable
meet financial obligation 2.5% for Debentures brokerage,
Written consent before Written consent before usually 1% of
inclusion of name in inclusion of name in the securities
prospectus prospectus Disclosure in prospectus. procured.
Lead merchant banker to Disclosure in
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WLC 30 CHAPTER 06 – SHARES

underwrite 5% or Rs. 25 Name and address of the prospectus

lacs whichever is less. brokers to be mentioned Name and
Outstanding commitment in prospectus address of the
not to exceed 20 times its brokers to be
net worth mentioned in
In case of devolvement, Number and value of prospectus
lead merchant banker to securities underwritten to
ensure payment within be disclosed in prospectus
60 days.
To comply with Code of To comply with Code of A copy of underwriting
Conduct Conduct agreement to be filed with
To appoint Compliance ROC.
Officer To appoint Compliance
Officer
ISSUE OF SECURITIES AT PREMIUM [SECTION 78]
A company may issue securities at a premium when it is able to sell them at a price above face value
for example Rs. 10/- per share at a price of Rs.47/- per share. Rs. 10/- is the face value (nominal
value) and Rs. 37/- is the premium.
Premium may be utilized only for: -
Issuing fully paid Bonus shares.
Writing off the balance of preliminary expenses.
Writing off the commission paid of discount or expenses incurred in the connection with the issue of
securities.
Providing premium payable on redemption of redeemable preference shares or debentures.
ISSUE OF SHARES AT DISCOUNT [SECTION 79]
If the buyer of the shares is required to pay less than the face value of shares for example Rs. 9/- per
share against the face value of Rs. 10/-, then the share is said to be issued or sold at a discount (in this
case 10% discount).
Shares can be issued at a discount on fulfillment of the following conditions: -
The shares to be issued should be o a class that has previously been issued by the company.
The issue should be authorised by a resolution of the member in general meeting, and sanctioned by
the Central Government.
The resolution authorising the issue should state the maximum rate of discount. The discount should
not exceed 10% unless the Tribunal sanctions a higher rate.
A period of one year should have elapsed from the date the company was entitled to commence
business.
The shares should be issued within two months from the date of the sanction by the Central
Government or permitted extended period.
This section and restrictions do not extend to issue of debentures at a discount
BUYBACK OF SHARES [SECTION 77A AND 77B]
This section enables a company to purchase its own shares, whether equity or preference shares or
other specified securities including employees’ stock option or other securities as may be notified by
the Central Government from time to time. This section applies both to public and private companies,
whether listed or unlisted.
The buy back by a listed company is to be made in accordance with SEBI (Buy back of Securities)
Regulations, 1998, and by an unlisted company in accordance with Private Limited Company and
Unlisted Public Limited Company (Buy back of Securities) Rules, 1999.
Pre-conditions
Permitted only if the articles of the company so authrorised.
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WLC 31 CHAPTER 06 – SHARES

Buy back of shares/securities is restricted to 25% of the total paid up capital and free reserves of the
company, in any financial year.
The debt equity ration should not be more than 2:1 after buy back.
All the shares or other specified securities for buy back are fully paid up.
The shares are not subject to any lock in period. .
Restrictions imposed
A Company shall not buy back its shares or other specified securities
Through any subsidiary company, including its own subsidiary company.
Through any investments company or group of investment companies.
If default subsists in repayment of deposit or interest payable thereon, redemption of debentures or
preference shares, or payment of dividend to any shareholder, or repayment of any term loan or
interest payable thereon to any financial institution or bank.
If the company has (I) failed to file the annual return with the ROC, (II) failed to pay dividend with
30 days from the date of declaration (III) failed to prepare the Balance Sheet and profit and loss
account as per the requirements of Schedule VI.
ADVANTAGES DISADVANTAGE
On buy back of shares the promoters holding This militates against the interests of the
increases automatically without buying any extra creditors, particularly unsecured creditors who
shares. This can also be used as defensive have advanced funds either as deposit or
mechanism against hostile takeovers; otherwise based on the paid up capital structure;

The EPS increases. This leads to increase in the Can tantamount to negation of capital formation,
share price of the company over a period of time. in fact this will shun capital growth.
Enhancement of shareholders` value as a result of
buy back of shares
Save stamp duty on shares so bought back by the
company
Considered as an addition for rewarding the
shareholder in the years of mega profits or This will lead to manipulation of shares in the
landslide earnings as opposed to minuscule market due to price rigging which may work to
dividend the prejudice of the shareholders;
It reflects positive thinking by the management This will shun competitive and healthy takeover,
and instills more confidence amongst the which may be beneficial particularly to hose
investors; companies, which are facing financial crunch
With lesser number of shares in circulation in the
market an illiquid situation will be created.
With lesser number of shares in circulation and
lesser number of shareholders the quality of
service can be improved.
REDUCTION OF CAPITAL [SECTIONS 100 –105]
A company limited by shares or a company limited by guarantee and having a share capital may
reduce its capital: -
If so authorised by its articles.
Confirmation by the Tribunal.
Passing of a special resolution.
Circumstances of reduction of capital
Extinguishing or reducing liability on shares not paid
Cancellation of paid up share capital
Return of excess capital
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WLC 32 CHAPTER 06 – SHARES

The general rule is that the prescribed majority of the shareholders are entitle to decide whether there
should be a reduction of capital, and, if so, in what manner and to what extent it should be carried into
effect.
TRANSFER AND TRANSMISSION OF SECURITIES [SECTION 108 TO 111A]
TRANSFER
Transferability of shares is one of the most vital features of company limited by shares. It is this
attribute of a share that endows company with perpetual and interrupted existence. Upon
incorporation, a company acquires its own independent legal personality and distinct entity, and its
shareholders acquire the right to hold and transfer their shares in the company.
A Private Limited company by virtue of Section 3(1)(iii) may impose restrictions on the transfer of
shares, however, a public limited company, whether listed or closely held the shares shall be freely
transferable.
It must be noted that the provisions of this section are applicable only in the case of physical shares.
Section 108 requires for effecting a valid transfer the following requirements are to be satisfied: -
The instrument of transfer shall be in the prescribed form (Form 7B).
The form has been duly stamped (25 Paise for every Rs. 100/- of the consideration value or market
price which ever is higher, in the case of gift the stamp duty should be paid on the market price)
The transfer deed should be duly filled up – executed by or on behalf of the transferor; name, address,
occupation of the transferee and duly signed by the transferee or his duly appointed representative
The related share certificate in original shall accompany the transfer deed.
The duly executed and completed transfer deed along with related share certificate should be
deposited at the registered office or any other notified office (may be share transfer agent) of the
company.
The transfer deed should be valid.
Validity period of transfer deed –
In the case of listed shares - 12 months from the date of presentation or date of first book closure after
the date of execution, whichever is later.
In the case of private or closely held public limited company – 2 months from the date of presentation.
Where the pledged shares are released by lending bank/financial institution – 2 months from the date
of such release.
Blank transfer - where a transferor signs a share transfer form without filing in the name of the
transferee and hand it over along with the share certificate to the transferee thereby enabling him to
deal with the shares. This procedure facilitates sale and purchase of shares by delivery. At the time
when the validity of the transfer deed is about to expiry, the last purchaser may complete the deed and
lodge for registration in his name.
Shares of Public limited company freely transferable – after the enactment of Depositories Act 1996,
the Companies Act has accordingly been amended. Section 111A(2) read with Section 111(14) inter
alia, provide the shares of a public limited company shall be freely transferable. In other words, only
a private limited company may refuse transfer of shares.
However, an application may be made to the National Company Law Tribunal if such transfer is in
contravention of any of the provisions of the SEBI Act, 1992 or any other law for the time. Such an
application shall be made by NSDL/CDSL (Depository), SEBI, Depository Participant or company
within 2 months of the transfer.
TRANSMISSION
Transmission of securities takes place by operation of law (i) when the member dies or; (ii) when he
is adjudicated an insolvent; or (iii) where the member is a company and it goes into liquidation.
The person entitled to the securities by operation of law shall send the legal document evidencing his
title to the property (securities) together with the original certificates of the related securities. The
company on being satisfied registers the name of that person in the place of the previous member.
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WLC 33 CHAPTER 06 – SHARES

NOMINATION OF SECURITIES
Every holder of shares or debentures may at any time nominate a person to whom his
shares/debentures shall vest in the event of his death.
The intimation regarding nomination shall be in prescribed form in duplication and filed with the
Company/Share Transfer Agents who will return one copy thereof to the shareholder/debenture
holder. A minor can be nominated, however the name and address of the guardian shall also be filed
up.
Such nomination will hold good against any legal successor.
DEPOSITORY SYSTEM
A depository is a facility for holding securities, which enables securities transactions to be processed
by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise
them (so that they exist only as electronic records).' India has chosen the dematerialisation route. In
India, a depository is an organisation, which holds the beneficial owner's securities in electronic form,
through a registered Depository Participant (DP). A depository functions somewhat similar to a
commercial bank. To avail of the services offered by a depository, the investor has to open an account
with it through a registered DP.
A depository interfaces with the investors through its agents called Depository Participants (DPs). If
an investor wants to avail the services offered by the depository, the investor has to open an account
with a DP. This is similar to opening an account with any branch of a bank in order to utilise the
bank's services.
SEBI has issued separate regulations for Depositories and Depository Participant.
Beneficial Owner is a person in whose name a demat account is opened with Depository (NSDL/
CDSL) for the purpose of holding securities in the electronic form and whose name is recorded as
such with the Depository.
A Depository Participant (DP) is an agent of the depository who is authorised to offer depository
services to investors. Financial institutions, banks, custodians and stockbrokers complying with the
requirements prescribed by SEBI/Depositories can be registered as DP.
Dematerialisation is the process by which physical certificates of an investor are converted to an
equivalent number of securities in electronic form and credited in the investor's account with its DP.
In order to dematerialise certificates; an investor will have to first open an account with a DP and then
request for the dematerialisation of certificates by filling up a dematerialisation request form [DRF],
which is available with the DP and submitting the same along with the physical certificates. The
investor has to ensure that before the certificates are handed over to the DP for demat, they are
defaced by marking "Surrendered for Dematerialisation" on the face of the certificates.
'Rematerialisation' is the term used for converting electronic holdings back into certificates. In this
case, the beneficial owner has to make a specific request to his DP. The DP will forward the same to
NSDL, after verifying that the beneficial owner has the necessary balance. NSDL in turn will intimate
the registrar who will print the certificates and dispatch the same to beneficial owner. Thereafter, the
company/Share Transfer Agent will remove the name of that person from the register of beneficial
owner and enter the same in the Register of Members of the company.
The benefits of participation in a depository are:
Immediate transfer of securities;
no stamp duty on transfer of securities;
elimination of risks associated with physical certificates such as bad delivery , fake securities , etc.;
reduction in paperwork involved in transfer of securities;
reduction in transaction cost;
nomination facility;
change in address recorded with DP gets registered electronically with all companies in which
investor holds securities eliminating the need to correspond with each of them separately;
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WLC 34 CHAPTER 06 – SHARES

transmission of securities is done by DP eliminating correspondence with companies;

convenient method of consolidation of folios/accounts ;
holding investments in equity, debt instruments and Government securities in a single account;
automatic credit into demat account, of shares, arising out of split/consolidation/merger etc.
EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME
SEBI has issued ESOS and ESOP Guidelines listed companies. The Department of Company Affairs
has on the same line issued Rules for unlisted companies.
“Employee stock option” means the option given to the whole-time Directors, Officers or employees
of a company which gives them the benefit or right to purchase or subscribe at a future date, the
securities offered by the company at a predetermined price.
“Employee stock option scheme (ESOS)” means a scheme under which a company grants employee
stock option.
Employee stock purchase scheme (ESPS)" means a scheme under which the company offers shares to
employees as part of a public issue or otherwise.
Eligibility to participate: - An employee including overseas employee and employee of a subsidiary
company.
Not Eligibility to participate -
Promoter or belongs to the promoter group.
A director who either by himself or through his relative or through any body corporate, directly or
indirectly holds more than 10% of the outstanding equity shares of the company.
The company shall for the purpose constitute a Compensation Committee which will consist of
majority of independent directors. The committee shall formulate the terms and conditions of the
ESOS.
The scheme shall be approval by the shareholders by way of a Special Resolution. The explanatory
statement shall contain prescribed details regarding the scheme including the particulars of the
concerned employees. Option granted to an employee shall not be transferable to any person.
In the event of the death of employee while in employment, all the option granted to him till such date
shall vest in the legal heirs or nominees of the deceased employee.
Until all the options are exercised/lapsed, prescribed particular of the scheme shall be disclosed in the
Directors Report of the company. The company has to place before the shareholders at every meeting
a certificate from the Statutory Auditors certifying that all the related provisions with regard to ESOS
have been duly complied with by the company. The company has to follow prescribed accounting
policy.

LECTURES BY PROF. S N GHOSH