CHEQUE

SWEAT SHARE
BONUS SHARE
ISSUE OF SHARE
 CHEQUE
"Cheque is an instrument in writing containing an unconditional order, addressed to a banker,
signed by the person who has deposited money with the banker, requiring him to pay on
demand a certain sum of money only to or to the order of a certain person or the bearer of the
instrument."

 Section 5 of the Indian Negotiable Instrument Act of 1881 defines the Cheque as “A Bill of
Exchange drawn especially on a specified Banker and not on expressed to be payable
otherwise than on demand”
 Essentials of Cheque

1. It is an Instrument in writing, i.e., it must be written in Ink and not by pencil.

2. It must be Drawn on Particular Bank. It is drawn by a customer who has deposited
money with the Bank.
3. It must not contains any conditions.
4. It must be signed by the Account holder.
5. It is always payable on demand.
6. It must contain an order to pay a certain sum of money.
7. A Cheque is payable to a Specified Person Only.
Types of Cheque

• Bearer Cheque
• Order Cheque
• Open Cheque
• Crossed Cheque
• Anti-Dated Cheque
• Post-Dated Cheque
• Stale Cheque
• Mutilated Cheque
Bearer Cheque

• The words “or bearer” are printed on the cheque, & it is not canceled, then the cheque is called a bearer cheque.

• A bearer cheque is made payable to the bearer i.e. it is payable to the person who presents it to the bank for
encashment.

• In simple words a cheque that is payable to any person who presents it for payment at the bank counter is called
a ‘Bearer cheque’
Order Cheque

• The word "or order" is written on the face of the cheque, the cheque is called an order
cheque.
• Such a cheque is payable to the person specified therein as the payee, or to anyone else to
whom it is endorsed (transferred).
Open Cheque

• When a cheque is not crossed, it is known as an “Open Cheque” or an “Uncrossed

Cheque”.

• These cheques may be cashed at any bank and the payment of these cheques can be
obtained at the counter of the bank or transferred to the bank account of the bearer.

• An open cheque may be a bearer cheque or an order cheque.

 Crossed Cheque

• Crossed cheque means drawing two parallel lines on the left corner of the cheque with or
without additional words like “Account Payee Only” or “Not Negotiable”.

• A crossed cheque cannot be encashed at the cash counter of a bank but it can only be
credited to the payee’s account. This is a safer way of transferring money than an
Uncrossed or open cheque.
Anti-Dated Cheque

• Cheque in which the drawer mentions the date earlier than the date on which it is presented
to the bank, it is called an “anti-dated cheque”.

• Such a cheque is valid up to six months from the date of the cheque drawn.

Post-Dated Cheque

• Cheque on which the drawer mentions a date that is yet to come (future date) to the date on
which it is presented, is called a post-dated cheque.

• For example – If a cheque presented on 20th Nov 2022 bears a date of 30th Nov 2022, it is a
post-dated cheque. The bank will make payment only on or after 30th Nov 2022
Stale Cheque

• If a cheque is presented for payment after six months from the date of the cheque, it is
called a stale cheque. After the expiry of that period, no payment will be made by banks
against that cheque.

• A stale cheque is not honored by the bank.

Mutilated Cheque

• When a cheque is torn into two or more pieces and presented for payment, such a cheque is
called a mutilated cheque. The bank will not make payment against such a cheque without
getting confirmation from the drawer.
Material Alteration
• Any alteration made in the cheque is Material Alteration.
• these cheques are not honored by Banks, for making This a valid cheque then the drawer has to sign at every
correction made.

• Alterations' Like:
– Date,
– Amount,
– Payee Name,
– Converting orders into bearer cheques, etc.
 SWEAT SHARE

According to the Companies Act, sweat equity is equity shares that a company issues to an
individual in consideration of his/her services, knowhow or any other value addition that the
company has benefited from. . In other words, it is the equity given to a company's
executives to reflect the value the executives have added and will continue to add to the
company.
 BONUS SHARE
Bonus shares are the additional shares that a company gives to its existing shareholders on
the basis of shares owned by them. Bonus shares are issued to the shareholders without
any additional cost.

ADVANTAGES OF BONUS SHARES

•There is no need for investors to pay any tax on receiving bonus shares.
•It is beneficial for the long-term shareholders of the company who want to increase
their investment.
•Bonus shares enhance the faith of the investors in the operations of the company
because the cash is used by the company for business growth.
•When the company declares a dividend in the future, the investor will receive a higher
dividend because now he holds a larger number of shares in the company due to bonus
shares.
•Bonus shares give a positive sign to the market that the company is committed to long-
term growth story.
 ISSUE OF SHARES
Issue of Shares is the process by which companies pass on new shares to shareholders, who
can be either individuals or corporates. While acquiring the shares, companies follow the rules
prescribed by the Companies Act 2013.

There are 3 basic steps in the procedure of issuing the shares.

1. Issue of Prospectus
2. Receiving Applications
3. Allotment of Shares 
1.Prospectus Issue
This is the first step of the Issue of Shares wherein an enterprise releases a prospectus to the public. It
contains the details that a new enterprise has come into being and that it would require funds from the
public to operate, for which the public can purchase shares of that particular enterprise.

The prospectus has all the necessary details of that share issuing authority along with details pertaining to
how they will collect money from investors.

2.Application Receipt
The second step in share issuing is the receipt of application as and when an investor wishes to purchase
a share of that asset or enterprise. However, they have to follow the necessary rules and regulations as
cited in the prospectus issued earlier.

They also have to deposit the amount against shares they are willing to purchase. The money has to be
deposited to any scheduled bank along with the application.
3.Share Allocation
This is the last step in issues of shares wherein after completing the formalities from the investor’s side, the
enterprise will issue the shares to the investors. As there is a minimum subscription limit, one has to wait
till that quota is fulfilled.

Once that limit is fulfilled, the shares will be allocated to those investors who have subscribed for the
capital shares. A letter of allotment is also sent out to those who have been allocated shares.

Therefore, this process makes up for an authentic way of trading shares between investors and enterprises.
THANK YOU

FIDA MP
20UGBBA06
DEPARTMENT OF BUSINESS
STUDIES