Companies Act, 19 56(2013)

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 Share & Share Capital
 Meaning of Share
 Share may also be defined as” Interest in the company entitling the owners
thereof to receive proportionate parts of profits, if any, and of a
proportionate part of the assets of the company upon liquidation.

 Meaning of Share Certificate

 A share certificate is issued by a company under its common seal . It specifies
the share held by a member & is prima facie evidence of the title of member
to the shares.

 Each share is distinguished by an appropriate number.( Distinctive No)

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 Share & Share Capital
 Meaning of Stock :
 Stock is the aggregate of fully paid up shares, consolidated & divided for the
convenient holding into different parts.

 It may be transferred or split up into fraction of any amount, without regard

to original face value of share.

 Stock can be validly issued only when shares are fully paid up.

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 Difference between Share & Stock
S.No Share Stock

1 Has a nominal value Has no nominal value

2 May not be fully paid up Always fully paid up

3 Transferable in round Transferable in fraction

numbers

4 Can be issued directly Can not be issued directly

5 Has a distinctive number No such number

6 All shares of a class are of May be different denomination

equal denomination

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 Share & Share Capital
 Types of Shares
 There are two types of shares
1. Preference Share
2. Equity or ordinary share. This type of share can be further divided into
following:-
a. With voting rights;
b. or with differential rights as to dividend, voting or otherwise
Characteristics of Preference Shares
 These have preferential rights for payment of Dividend during the life time of
the company.
 These have preferential rights to the return of capital when the company
goes into liquidation

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 Share & Share Capital
 Types of Preference Shares
1. Cumulative or non cumulative
 With regard to payment of dividends, preference shares may be Cumulative
or non cumulative
2. Participating or non- participating
 Participating preference shares or those shares which are entitled to a fixed
preferential dividend & in addition carry a right to participate in the
surplus profits along with equity shareholders.
3. Redeemable or irredeemable.
 Redeemable Preference Shares are issued by a public limited company, to be
redeemed either at a fixed date or after a certain period of time during the
life time of the company.
 Conditions for issue of such shares are laid down in sec 80 of the Act.
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 Share & Share Capital
 Types of Preference Shares
4. Convertible or Non Convertible
 Convertible Preference Shares are hose which would be convertible into
equity shares after a certain period.
 Share Warrant
 A public limited company limited by shares, if so authorized by its articles,
may issue with the prior approval of the central Govt,
 with respect to any fully paid up shares,
 a warrant stating the bearer of the warrant is entitled share specified therein.
 The share becomes transferable by mere delivery of the share warrant.

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 Difference between Share warrant & Share Certificate
S.N Share warrant share certificate
o

1 Issued only by public companies Issued by public & Private Companies

2 Provision in Articles & approval of Cent It is a statutory obligation

Govt

3 Only for fully paid up shares For all shares

4 Holder is not a member of the He/She is a member

company , unless the articles so
provide
5 Transferred by mere delivery. No For transfer of shares registration is
registration is necessary necessary

6 No stamp duty payable on transfer Stamp duty is payable on transfer of

shares 8
 Difference between Share warrant & Share Certificate
S.N Share warrant share certificate
o

7 By usage – a negotiable instrument Not so considered

8 Does not constitute share qualification It does

of a Director

9 Holder can not put up a petition for Holder can put up such a petition
winding

10 Dividend is paid to the holder of a Dividend is paid to the holder of a share

share warrant on presentation of the certificate by the issue of a dividend
relevant coupon attached to the share warrant
warrant

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 Share & Share Capital
 Transfer of Shares: 
 The conveyance of a member's share(s) to another person. Shares are transfe
rable in such manner as maybe prescribed in the Articles of Association .
  The transfer is achieved by the execution of a transfer form by the transferor 
and its being lodged, together with the share certificate, with the registrar of
 the company so that the entry in the company's register of shareholders can
 be amended. Actual transfer of the legal title to the shares is effected when 
the charge is made in the company's register.
For transfer of shares of a company listed on NSE/BSE a person has to open a DP
account . The shares are then transferred electronically.
DP: Depository Participant
NSE: National Stock Exchange, BSE: Bombay Stock Exchange

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 Share & Share Capital
 Transmission of Shares takes place:
 when the registered shareholder dies or
 When he is adjudicated insolvent or
 Where the shareholder is a company & it goes into liquidation.
 Nomination of shares: Every holder of shares , may at any time nominate, a
person to whom his shares vest in the event of his death. The nomination
shall be in the prescribed form & lodged with the company.
 Forfeiture of shares: A company’s Articles of Association usually contain a
power for it to forfeit the shares of a member who fails to pay calls within a
certain time after they fall due. Forfeiture of shares must be exercised :
1. In accordance with the Articles.
2. After giving a proper notice.
3. After passing a resolution for forfeiture.
4. Bonafide & in good faith 11
 Share & Share Capital
 Surrender of shares: It means voluntarily return of shares by the shareholder
to the company for cancellation, There is no provision for suuernder of
shares either in the Act r in the Table A.However articles of some companies
may allow surrender of shares as a short cut to the long procedure of
forfeiture.
 Buy Back of Shares : The Company Act 2013 , SEBI guidelines & Department
of Company Affairs allow companies to purchase their own shares. The
companies have to adhere to the guidelines & follow certain procedure for
buy back of shares.

 Sweat Equity Shares means equity shares:

 Issued by the company to employees or Directors at a discount.
 For consideration other than cash for providing know how.
 Making available rights in the nature of Intellectual Property Rights or value
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additions.
 Share & Share Capital
 Sweat Equity Shares: Conditions for Issue:
 Is authorized by special Resolution.
 The resolution specifies the number of shares, current market price,
consideration, if any, and the class of employees or directors to whom such
equity shares are to be issued.
 Not less than one year has at the date of issue has elapsed since the date on
which the company was entitled to commence business.
 The sweat equity shares of accompany whose equity shares are listed on a
recognized stock exchange , are issued in accordance with the regulations
made by SEBI.

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Company Act-1956(2013)

THANKS

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