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PRESENTED BY
RISHABH PRASAD
DIPANKER
SUDHANSU
KARUNAKAR
AVINASH
HARSHA
MATHEW
THIANESWARAN
SATYAN


 

! The Companies Act defines a share as ´Share in

the Share Capital of the company, and includes
stock except where a distinction between stock
and share is expressed.µ

! According to J.Farwell a share is ´ the interest

of a shareholder in a company measured by the
sum of money, for the purpose of liability in the
first place and of interest in the second.µ
 


! Shares in India, are both goods as well as chose ² in ² action. It

is bundle of rights, each one of which is a legal chose ² in ²
action. The legal title to the share is vested in the person
entitled to it, either by the company or by transfer from a
former holder.

  


! Before passing Companies Act, 1956, shares used to be in three

types

Ordinary Shares
Preference Shares
Deferred Shares

! After Companies Act , companies issued only two types of

shares

Preference Shares
Equity Shares
 
 


! Offers are made on application forms

supplied by the company. When an
application is accepted, it is an allotment.
´Allotmentµ is generally neither more nor
less than the acceptance by the company of
the offer to take shares.

! It is an appropriation out by the directors«

of shares to a particular person.

! A valid allotment has to comply with the

requirements of the Act and the principles
of the law of contract relating to
acceptance of offers.
   |    


!
 !
"#$%&'It means the amount which is, in the estimate of the
directors, enough to meet the needs like purchase price of any
property partly or wholly, preliminary expenses, and working
capital.

!   ( ( "#)*&' Where

prospectus has not been issued, no allotment shall be made unless
at least three days before a statement in lieu of prospectus has
been filled with the register.

!  +("#),&'Shares can not

be allotted at once after the issue of the prospectus . No
allotment shall be done until the beginning of the 5th day from the
date of the issue of the prospectus.
X|

!  
- 

ü An
allotment must be made by a resolution of the board
of directors ´Allotment is a duty primarily falling
upon directorsµ and this can be delegated except in
accordance with the provisions of the articles.

! 
 -
ü Allotment must be
done within a reasonable time, otherwise the
application lapses. On the expiry of reasonable time
section 6 of the Contract Act applies and the
application must be deemed to have been revoked.
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! An allottee of shares is entitled to

have from the company a document
called share certificate, clarifying that
he is the holder of the specified number
of shares or debentures or debenture-
stock is obliged to deliver to the
allottee a certificate of shares within
three months of allotment.

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( (. 
! When joint stock companies were established, the
great object was that the shares should be capable
of being transferred. Accordingly, by section 82 of
the companies Act, it is provided that the shares of a
member in a company shall be moveable property
capable of being transferred in the manner provided
by the articles of the company.

 |   
  

! Is open to a company to restrict the right of its
members to transfer their shares. The article of a
private company as against those of a public company
contain more rigorous restrictions on its members to
transfer their shares.
- /X
! The Company Act, 1956, permits brokerage to
be paid as has been lawful for a company to pay.
It has been recognized in Metropolitan Coal
Consumers Assn vs. Scringeour that reasonable
brokerage should always be allowed.

! Brokerage is different from underwriting

commission. A broker does not undertake to
subscribe for shares to the extent of public
default.

! Brokers are professional men, such as ´stock-

brokers, bankers and the like, who exhibit
prospectus and send them to their customers,
and by whose mediation the customers are
induced to subscribe.
   
 


! If the market exists, a company
may issue its shares a price higher
than their nominal value. There is
no restriction on the sale of share
at a premium.

! SEBI guidelines have to be

observed as they indicate when an
issue has to be at par and when
premium is chargeable.

! Premium may be received in cash or

kind. An amount received extra
than the nominal value due to the
premium should be carried to the
share premium account.

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! Share capital means the capital raised by a company by
the issue of shares.

^ 
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! The capital of the company may be two typesü

 (    . |ü In case of a

company limited by shares, that part of the capital of the
company which carries a preferential right as to payment
of dividend during the lifetime of the company and
repayment of capital on winding up of the company is
known as Preference Share Capital.

0! . |ü All the share capital

which is not preference share capital is known as equity
share capital. Capital which does not carry any
preferential rights.
   |'

! Vuthorised Capital
! Ossued Capital
! aubscribed Capital
! ?aid up Capital
! Ôeserved capital
?




?


! ?reference share capital means that part of

the share capital of a company which fulfils
both the following requirementsü

m uuring the continuance of the company it

must be assured of a preferential dividend.

m Yn the winding up of the company it must

carry a preferential right to be paid up.
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?reference shares may be either

! |umulative
! mon-Cumulative

@ut in the absence of any clear provision to

the contrary, preference shares are
presumed to be cumulative.
  

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! 2hese are more like ! Yrdinary shareholders cannot
debentures than like shares. be paid back except under a
They are entitle to a fixed scheme involving reduction of
rate of interest. The company capital.
may choose them to pay them
back. ! Yrdinary shareholder is
! 2he right to vote restricted entitled to vote on all matters
to resolutions which directly affecting the company.
affect the rights attached to
his preference shares, except
when dividend has remained ! Ôate of income and risk
unpaid. involved is more.
! Yffers profitable and safe
source of investment.
i XX

! 1

  X
 " #2)
345&ü An equity shareholder of a company limited
by shares has a right to vote on every resolution
placed before it. His voting right on a poll is in
proportion to his share of the paid-up equity
capital of the company.
!  (   . " #2)3,5&üA
preference shareholder has the right to vote on
those resolutions which directly affect his rights.
Any resolution for winding up the company or for
the repayment or reduction of its share capital is
deemed to directly affect the rights of the
preference share holder.
 
  |
Further issue of capital of a company may take place
! -! ( 6. " #24345375&'
A public company limited by shares may, at any time,
increase its subscribed shares capital within the limit
of authorized capital by issuing new shares. It is for
the directors to decide whether an increase in the
subscribed capital of the company is necessary or not.

! !8 (   

. " #243953)5& ' where a company has
taken loan from the central government by issuing any
debentures or otherwise, the government may, in the
public interest , convert such debentures or loans into
shares in the company.
  8 .   8 
!
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! COMPANY LAW - AVTAR SINGH

! COMPANY LAW - R P & S N MAHESHWARI

! ELEMENTS OF COMPANY LAW ² N.D.KAPOOR

! COMPANY LAW ² ASHOK K BAGRIAL

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