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SHARE CAPITAL

Authorized or Nominal capital: As authorized by MOA


Issued & subscribed: Offered to public taken up.
Called up: Which has been called up on the shares
Paid up: Part of Issued capital which has been paid up.
Uncalled Capital : Not yet called
Reserve capital: to be called on winding up.
KINDS OF SHARE CAPITAL: Equity share capital: with voting rights
OR with differential rights as to dividend, voting, or otherwise as per
the Act.
Preferential share capital: that part of the capital which carries a
preferential right as to payment of dividend and repayment of capital
on winding up.
ALTERATION OF SHARE CAPITAL: If authorized by AOA, a Co. can
increase by issue of new shares, consolidate and divided any part of
its shares, convert fully paid up shares into stock and vice versa,
subdivide its shares, cancel shares which have not been taken up
and reduction of share capital.

Allotment
PUBLIC OFFER & FIRST ALLOTMENT: Registration of
Prospectus, Shares in Demat form, Minimum subscription :
90%, Application money shall not be less than 5% of the
nominal amount of shares, Amount collected should be
deposited in a separate Bank a/c., Subscription must be kept
open for least 3 working days, allotment can be made only after
beginning of the 5th day from the date of issue of prospectus,
shares must be listed in SE, to return of excess amount,
Return of allotment.
RIGHTS ISSUE: Right of pre-emption of existing shareholders.
Such shares must be offered to them first.
ALLOTMENT OF SHARES: The general principles of allotment
are : 1) Proper authority - Board of directors, 2) Within
reasonable time,
3) Communication, 4) Absolute and
unconditional
5) Revocation can be done by the applicant
before letter of allotment is posted

TRANSFER, TRANSMISSION & FORFEITURE

TRANSFER OF SHARES: As prescribed in Act and


AOA. Board of Directors are given the powers. Co. to
maintain proper records and file necessary returns.
PROVISIONS: 1) Properly executed transfer form and
share certificate to be submitted, 2) Application for
transfer 3) If refused, can appeal.
TRANSMISSION OF SHARES: On the death of
member, his legal rep. shall send to Co. share certificate,
death certificate and notice in writing signed by legal rep.
for transfer of shares to his name.
FORFEITURE: If the shareholders fails to pay the call
money within the stipulated time, shares can be forfeited
after giving proper notice to them.
CONDITIONS FOR FORFEITURE: As per AOA, notice,
resolution of board, and in good faith.

DIVIDEND & BONUS SHARES

DIVIDENDS : Board of Directors to decide %. To be declared at the


AGM and passed members cannot increase but can reduce %,
there is NO absolute right to dividend. It is in proportion to paid up
capital, only out of profits, transfer 10% of profits to reserve a/c,
paid in cash only.

Bonus shares: Companies accumulate the profits over


the years as reserves. If AOA permits these accumulated
reserves can be converted into share capital and issued
as Bonus shares (free shares) to its existing
shareholders.
CAPITALIZATION OF PROFITS: A Co. in the general
meeting on the recommendation of Board shall resolve:
to distribute to its members dividend, such free
distribution shall NOT be paid in cash, it can be by
paying up unpaid amount on any share, credited as
fully paid shares to members.

DEMAT

DEMATERIALISATION OF SHARES: Dematerialisation is the


process by which shares in the physical / paper form are cancelled
and credit in the form of electronic balances are maintained on
highly secure systems at the depository.

TEST ON 28.07.2010 SEC. A & B

TEST ON 30.07.2010 SEC. C

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