BREIF DESCRIPTION ABOUT SHARES UNDER COMPANIES ACT 2013

 BY SUSHMA GOWDA

INTRODUCTION

SHARE CAPITAL

Share capital is a classified as

1) Nominal, Authorised or registered Capital

2) Issued and Subscribed capital

3) called up and uncalled Capital

SHARE

Share is defined as share capital of a company which Stock exception in certain condition.

CLASSES OF SHARE

There are two Classes of Share, Equity share capital and preference share capital as per companies act 2013.

PREFERENCE SHARE CAPITAL

There are various Preference share capital namely participating and non-participating , cumulative and non-cumulative shares, redeemable and irredeemable preference share.

EQUITY SHARE CAPITAL

In case of Equity Share Capital it comes all share capital apart from preference share capital.

SWEAT EQUITY SHARES

Sweat equity Shares issued by a company to its employees to directors at a discount or for consideration, other than cash or for know how or in form of any other name is called as sweat equity share under companies act 2013.

It shall be authorized by the special resolution at a general meeting

The validity of Special resolution is 12 months.

The price of sweat equity share is to be determined by the registered valuer

Company shall maintain register of Sweat Equity shares in FORM NO SH 3.

Issue of Sweat Equity shares to employees and Directors at a Discount under Section 54 is outside the Scope of Section 53.

RIGHT ISSUE

Right Issue is an issue of capital offered to the existing shareholders

How Right Issue is carried on by the company

1) Listed Companies to inform concerned stock.

2) Company to give notice to Equity Shareholders giving him 15-30 days to decide.

3) Company can issue shares to other than existing shareholder for cash or other than cash if Special resolution is obtained

4) Price shall be determined by the Registered Valuer’s report.

5) The Provisions of Section 62 are Applicable to all type of Companies

BONUS SHARES

Bonus shares only be given if it is Authorised by Articles, Authorised on recommendation of Board in General Meeting.

No Default in payment of interest or principle in respect of Debt securities and fixed deposit.

Partly paid up shares to be made fully paid up on allotment, Listed Companies to follow SEBI regulations. Once it is announced by the Board about Bonus issue no company shall withdraw the same.

ISSUE OF SHARES AT PREMIUM UNDER SECTION 52 OF COMPANIES ACT 2013

Share premium to be transferred to share premium Account.

ISSUE OF SHARE AT DISCOUNT IN SECTION 53 UNDER COMPANIES ACT 2013

Issue of shares at discount is prohibited except by issue of Sweat equity shares apart from any discount shares is considered as Void.

ISSUE OF SHARES WITH DIFFERENTIAL VOTING RIGHTS [SECTION 43(A)(II)]

Not to exceed 26% of total post issue paid up Equity Capital including shares with differential voting rights at any point of time, No default in filling financial Statements in the last 3 years.

No default in payment of dividend.

Other things which comes in shares are issue /re-demption of Preference shares (section 55), ESOP (Employees stock option) and Preferential Issue Rule 13 of the Companies ( Share capital and Debenture)Rules, 2014